Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

Switzerland Goes Further into Never-Never Land

admin by admin
January 15, 2015
in Uncategorized
0
0
SHARES
18
VIEWS
Share on FacebookShare on Twitter

Q&A: What Today’s Swiss Central Bank Surprise Currency Move May Mean

by Michael Haltman

While not a currency expert, there is little doubt that the Swiss National Bank surprise decision to abandon the 1.20 Swiss franc peg to the euro will have significant financial market and economic implications! What some of these might be are discussed below.

Click for article at Daily Mail with pictures of world’s largest assembly of Alpenhorns.
alpenhorns-daily-mail-380x180

And in addition to the currency move, the Swiss central bank also cut its benchmark interest rate from -.25% to -.75%.

If you were doing a double-take, you did see that correctly…Investors will pay more for the privilege and implied safety of putting money there!

If you make a long-term deposit (say 1 year) you will pay a safekeeping storage fee at the rate of $7.50 per $1,000. Of course the return of deposit is only guaranteed in Swiss francs. If you want the money in euros, pounds or dollars you will get whatever the current exchange rate is at the time. If the Swiss franc has appreciated you will be very happy with an exchange rate gain. But that does not have to be the case. See GEI News: Japan Will ‘Safeguard’ Your Money Without Charge for 5 Years.

Market impact of the currency move was swift and mostly negative for holders of Swiss stocks and for those hedge funds or traders long specific currency pairs trades featuring the Swiss franc.

But, at the end of the day, what does it all actually mean?

From the website SWI the following Q&A was written by Clare O’Dea on the overall situation and view of the impact going forward:

Q: What is the exchange rate ceiling?

A: This was a policy introduced by the Swiss National Bank (SNB), Switzerland’s central bank, in 2011 to stop the Swiss franc from gaining too much in value against the euro. The move was deemed necessary because the eurozone is Switzerland’s largest trading partner and the weakening euro meant that Swiss products were fast becoming unaffordable. Swiss exporters were therefore suffering.

The SNB set a minimum value of 1.20 francs to 1 euro and promised it wouldn’t let the rate go lower than that. To deliver on this promise, it has had to spend vast amounts of money on buying euros over the past three years. Now, in one stroke of the pen, the ceiling – or floor, depending on how you look at it – has been removed and the franc has shot up 30% in value against the euro.

Q: Why scrap it today of all days?

A: It was always going to be difficult to back out of this artificial arrangement without causing a shock to the system, although there may have been the option to make the move in steps. SNB chief Thomas Jordan has said the euro cap has served its purpose, giving Swiss manufacturers time to adjust to the situation. It wasn’t sustainable to hold this course in the long term “on the basis of international developments”, he said, so they bit the bullet.

Those developments included the strengthening US dollar, fears that the European Central Bank will flood the markets with hundreds of billions of euros later this month and the potential of Greece exiting the euro.

Last month the SNB said it would start charging foreign central banks to keep francs on deposit in Switzerland as a way of discouraging too much stockpiling of the franc. The franc is traditionally a safe currency – a so-called safe haven – which banks like to have in their back pockets in turbulent times. This is one of the other ways of preventing the franc from becoming too strong.

Q: So it’s good news?

A: If you’re paid in francs and are planning a holiday abroad, your budget for souvenirs just got bigger. It should also mean cheaper retail prices for the Swiss consumer, as most goods in Swiss shops are imported.

Q. Who’s not happy about this?

A: Traders don’t like surprises of this sort. The initial reaction has been to sell off Swiss stocks – the Swiss stock market is on track to make its largest single-day loss in 25 years.

The other losers are Swiss exporters, who have been happily living with the comfort blanket of the euro cap for more than three years. Today’s news is like an ice bucket challenge for Swiss exporters – without the benefit of doing it for a good cause.

The Swiss trade union federation isn’t happy either. It warned that the decision could cost jobs and affect salaries.

Q: And what does it mean for tourists coming to Switzerland?

A: European, British and American tourists will feel the hit immediately. The meal that cost them the equivalent of €100 last night will cost around €125 tonight. That means cutting back on spending and maybe even considering another alpine destination instead. Swiss hoteliers must feel like crying.

Q: So what happens now?

A: The SNB says it is still committed to ensuring price stability and that it could still intervene in the foreign exchange markets by buying up other currencies, such as the euro. But the exact shape of its future currency strategy remains strangely unclear.

Some economists had predicted the SNB would change its strategy to peg the franc to a basket of currencies, including the US dollar which has been appreciating against the franc. But this has not happened. Instead, the markets have been rather puzzled by a lack of clarity from the SNB over how exactly it will defend the franc in the coming months.

Previous Post

Investing.com Technical Summary 15 January 2014

Next Post

Fed’s Balance Sheet 14 January 2015 Again At New Record High. Has QE Really Ended?

Related Posts

What Is Low-Code Development?
Business

What Is Low-Code Development?

by John Wanguba
June 10, 2023
5 Cryptocurrencies Under $0.10 To Buy Now
Economics

5 Cryptocurrencies Under $0.10 To Buy Now

by John Wanguba
June 10, 2023
10-Year Dormant Bitcoin Whale Resurrects, Transfers $38.1M Worth of Bitcoin
Econ Intersect News

10-Year Dormant Bitcoin Whale Resurrects, Transfers $38.1M Worth of Bitcoin

by John Wanguba
June 10, 2023
Bitcoin Whales Invest Aggressively As Small Holders Divest
Economics

Bitcoin Whales Invest Aggressively As Small Holders Divest

by John Wanguba
June 7, 2023
Why Is The SEC Suing Binance?
Business

Why Is The SEC Suing Binance?

by John Wanguba
June 6, 2023
Next Post

Fed's Balance Sheet 14 January 2015 Again At New Record High. Has QE Really Ended?

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins bank banking banks Binance Bitcoin Bitcoin adoption Bitcoin market blockchain BTC business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe Federal Reserve finance FTX inflation investment market analysis Metaverse NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • What Is Low-Code Development?
  • 5 Cryptocurrencies Under $0.10 To Buy Now
  • 10-Year Dormant Bitcoin Whale Resurrects, Transfers $38.1M Worth of Bitcoin

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish