CHF (Swiss Franc)

Re: CHF

Postby kennynah » Fri Aug 17, 2012 12:12 am

really expensive country, switzerland
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Re: CHF

Postby winston » Fri Aug 17, 2012 6:20 am

kennynah wrote:really expensive country, switzerland


Hmmm.... and some other countries aspired to be like them :P
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Re: CHF

Postby winston » Fri Dec 19, 2014 5:33 am

Not vested

The Swiss franc tumbled yesterday after its central bank imposed a charge on deposits, wary of a flood of money exiting Russia and likely inflows from the euro zone if the European Central Bank starts full-scale money printing early next year.

The Swiss National Bank's surprise move to introduce a charge on deposits was accompanied by a cut in its main rate band.

The franc fell to its lowest since mid- October against the euro and to a two-year low against the dollar.

In a thinly veiled reference to Russia's recent woes, the SNB said: "Over the past few days, a number of factors have prompted increased demand for safe investments." The introduction of negative interest rates makes it less attractive to hold Swiss franc investments.

Source: Reuters
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Re: CHF

Postby winston » Fri Jan 09, 2015 7:02 am

Where Your Money Isn’t Welcome

You know the world is crazy when banks charge negative interest on deposits. This is exactly what is happening in Switzerland as the small nation tries to fend of the monetary policy of the euro zone.

Good luck with that.

Switzerland has its own currency, the Swiss franc. In 2011 the PIIGS of the euro zone (Portugal, Italy, Ireland, Greece and Spain) were in tough shape. The integrity of the euro was in question as the Greek economy showed signs of collapse. Investors large and small fled the euro, rushing into other currencies like the Swiss franc.

As large pools of money sold euros and bought Swiss francs, the value of the franc soared against the euro. While the lofty currency allowed the Swiss consumers to buy more foreign goods, it meant that foreigners had to spend more on Swiss items, like Swatch watches and Swiss vacations.

Apparently the Swiss weren’t comfortable standing idly by as exports fell and tourism dropped off, so the Swiss National Bank (SNB) put in place a downside limit of 1.20 on how many Swiss francs one euro can purchase. If the exchange rate fell lower (meaning the franc was stronger), the SNB would print new francs and use them to buy euros, keeping the exchange rate at 1.2.

This action calmed the markets somewhat, but only for a while…

Over the last 12 months inflation in the euro zone has dropped near zero, while GDP growth is tepid at best. The unemployment rate is stuck above 10%, and Greece is about to hold an election in which a far-left party that favors repudiating debt is polling ahead of other parties.

Citing weakness across the euro zone, ECB policy makers announced they could soon start their own quantitative easing (QE) program. All of these things have combined to push the euro to decade lows, causing other currencies to soar… except for the Swiss franc.

As long as the SNB keeps its exchange rate pegged at 1.20 or higher, the euro can’t lose more value against the franc, which gives investors a free pass to exchange their falling euros into nice, strong francs at the artificially high level of 1.2.

Not being stupid, money managers, pension fund managers, and everyone else who handles large amounts of euros are rushing to exchange euros for francs. In an effort to shrink the amount of money coming in, the SNB has instituted negative interest rates on deposits.

The hope is that if investors have to pay a penalty in negative interest rates once they exchange euros for francs, they might be less inclined to make the trade in the first place. This is a great theory, but it misses the bigger point.

The euro zone is stuck in a low inflation or even deflationary environment, so funds stuck in that currency are going to suffer in the weeks and months ahead. Paying a small price, such as a negative interest rate on deposits, to hold funds in a different currency is worth it, especially if the exchange rate is artificially high in the first place.

The best thing the Swiss can do is get rid of the limit on the exchange rate and let the valuation float with the market. This will cause some pain in the short run, but it’s much better than continually printing new francs to buy euros as they flood the small country.

In the larger picture, the fact that Switzerland has to resort to such measures in the first place indicates how difficult the situation in the euro zone has become. For years we’ve pointed out the two big problems in Europe – an overhang of debt and aging populations.

Monetary policy and exchange rates won’t make these problems go away. The good news is that anyone living outside of the euro zone should be able to take a cheaper European vacation in the years to come.


Source: Economy & Markets
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Re: CHF

Postby winston » Thu Jan 15, 2015 6:34 pm

CHF up 13% against the Euro now ..
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Re: CHF

Postby winston » Thu Jan 15, 2015 6:45 pm

SNB Unexpectedly Gives Up Cap on Franc, Lowers Deposit Rate By Catherine Bosley

The Swiss National Bank unexpectedly gave up its minimum exchange rate of 1.20 franc per euro today, ending a three-year-old policy designed to shield the economy from the euro area’s sovereign debt crisis.

In a surprise move, the central bank lowered the interest rate on sight deposit account balances that exceed a given exemption threshold to minus 0.75 percent from minus 0.25 percent, it said in a statement today.

“While the Swiss franc is still high, the overvaluation has decreased as a whole since the introduction of the minimum exchange rate,” the institution said. “The economy was able to take advantage of this phase to adjust to the new situation.”

It also moved the target range for the three-month Libor to between minus 1.25 percent and minus 0.25 percent, from the current range of between minus 0.75 percent and 0.25 percent.

Source: Bloomberg
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Re: CHF

Postby behappyalways » Fri Jan 16, 2015 8:46 am

Swiss franc soars as Switzerland abandons euro cap
http://www.bbc.com/news/business-30829917


Why the Swiss franc can't escape being a safe haven
http://www.bbc.com/news/business-30833213
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Re: CHF

Postby behappyalways » Sat Jan 17, 2015 5:46 pm

Switzerland Switches Fronts in the Currency War
http://www.bloombergview.com/articles/2 ... rrency-war
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Re: CHF

Postby winston » Wed Jan 21, 2015 7:57 am

Did the Swiss Surrender, or Just Change Tactics?

On January 8, I wrote about the Swiss National Bank (SNB) keeping the exchange rate between the euro and the Swiss franc at 1.20 or higher. This means the euro can purchase at least 1.20 francs. If the exchange rate fell below 1.20, then the SNB would print new francs and use them to buy euros.

As I commented back then, the program kept the franc from getting stronger against the euro, which kept Swiss exports from getting too expensive when priced in euros.

The SNB put the exchange rate floor in place in September of 2011, and as recently as January 12 they reaffirmed their intent to maintain the minimum 1.20 exchange rate. But recent developments have caused problems for the SNB.

Over the past six months, the euro has been falling as investors prepared for a European Central Bank (ECB) quantitative easing (QE) program. Since July 2014, the euro sank from $1.35 to $1.16, a drop of 15%.

The SNB kept its program in place, so the euro/franc exchange rate remained at 1.20 or higher. Unfortunately, as I noted on January 8, this means that as the euro fell in value relative to most other currencies, it dragged the franc down with it…

As the franc devalued, the Swiss had to pay more for imports from China, the U.S., and basically everywhere but the euro zone, which meant a lower standard of living for the everyday citizen. Apparently, this became too much for the SNB to bear.

On January 15, just two days after they had reaffirmed their intent to hold the line at 1.20, the SNB announced that it would stop supporting the euro/franc exchange rate and would let the currency pair float freely. Market reactions were swift and dramatic.

At first the franc shot much higher in value, trading as high as 0.90 franc per euro, which is a drop of 30 cents in a matter of minutes; however, the exchange rate recovered a bit in the hours that followed and settled in around 1.05 francs per euro.

Since the move by the SNB was a surprise, all of the currency traders that were betting on the SNB supporting the 1.20 level were blindsided. A common trade was to have a standing order to go short the Swiss franc in euros when the price dropped below 1.20.

This made sense because the SNB was going to step in and make the franc cheaper, as it had every time the exchange rate fell below that level since September 2011. This was a guaranteed moneymaker for more than three years!

But this time the SNB did not step in, so traders ended up short the Swiss franc and long euros, only to watch the Swiss franc shoot higher in value as the exchange rate continued to fall.

There’s no estimate yet on how much money was lost, but it was probably in the billions of dollars.

It might seem like the Swiss capitulated, and did so at exactly the wrong time — just ahead of the ECB’s announcement on a QE program. Given that the euro has dropped so far already and interest rates are exceptionally low across the euro zone (two-year government bonds in eight European countries have yields below zero), it’s easy to see how the ECB could disappoint the markets with too modest of a plan, leading to the euro moving back up a bit.

But the Swiss might win this war after all by using negative interest rates.

When the SNB cut the cord of support for the euro/franc exchange rate, it also tripled the interest rate it charges on sight deposits (immediately available deposits from banks) from 0.25% to 0.75%. This means that depositors who are using the Swiss franc as a safe haven will have to pay a hefty penalty to keep their funds on hand.

The huge charge on deposits could also have the beneficial effect of stimulating the Swiss economy, which has stalled in recent months along with the rest of Europe.

No matter what happens, one thing is certain — we’re living through a time of extraordinarily low interest rates, where depositors in many countries are charged for the privilege of holding their funds in banks.

As Lance Gaitan discusses below in Ahead of the Curve, low interest rates are prevalent in developed nations around the world, which makes our paltry rates on U.S. government debt look like high-yield offerings!

Source: Economy & Markets
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Currency - General News

Postby behappyalways » Sat Aug 01, 2015 9:56 am

Swiss central bank makes 50bn Swiss franc loss
http://www.bbc.com/news/business-33729410
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