Swiss bank currency move

[somecyguy]

Anyone watching the news out of Switzerland? There is a going to be a ton of carnage within the currency trading firms. Hundreds of billions, maybe even a trillion worth of paper worth up in smoke in 24 hours. That's just crazy. I imagine multiple bankruptcies will pop up. It just goes to show how far from reality the investment markets can be. On the up side, vacations to Europe are going to get much much cheaper over the next few months.

 

[dmclone]

Anyone watching the news out of Switzerland? There is a going to be a ton of carnage within the currency trading firms. Hundreds of billions, maybe even a trillion worth of paper worth up in smoke in 24 hours. That's just crazy. I imagine multiple bankruptcies will pop up. It just goes to show how far from reality the investment markets can be. On the up side, vacations to Europe are going to get much much cheaper over the next few months.

Big move by the Swiss, this is going to hurt them in the short term but I think it's a good move overall.

 

[brett108]

Big move by the Swiss, this is going to hurt them in the short term but I think it's a good move overall.

Can anyone tell me why their currency is so strong? I mean, they are very small, have very little economic footprint outside of the banking industry, and they actually have negative interest rates, running a current -0.75%. How does that equate to the strongest currency in the world outside the sterling?

 

[kickout]

Can anyone tell me why their currency is so strong? I mean, they are very small, have very little economic footprint outside of the banking industry, and they actually have negative interest rates, running a current -0.75%. How does that equate to the strongest currency int he world outside the sterling?

The swissie has almost 'reserve' status in Europe. Switzerland is not in the EU and has historically been viewed as stable and conservative.

That move by the Franc was crazy. wish I would have been short the EUR/CHF, USD/CHF. I dabble in the FX markets my fair share.

 

[dmclone]

Can anyone tell me why their currency is so strong? I mean, they are very small, have very little economic footprint outside of the banking industry, and they actually have negative interest rates, running a current -0.75%. How does that equate to the strongest currency in the world outside the sterling?

The Euro has been holding back the value of the Franc.

 

[Clonehomer]

Can anyone tell me why their currency is so strong? I mean, they are very small, have very little economic footprint outside of the banking industry, and they actually have negative interest rates, running a current -0.75%. How does that equate to the strongest currency in the world outside the sterling?

Their willingness to keep secret and neutral has advantages.

 

[kickout]

They can also print money with impunity...much like the US can

 

[SCNCY]

Would someone be able to provide a link or explain what is going on here? I read an article, but didn't quite understand what the Swiss were doing.

 

[dmclone]

Would someone be able to provide a link or explain what is going on here? I read an article, but didn't quite understand what the Swiss were doing.

http://www.washingtonpost.com/blogs...erlands-currency-is-going-historically-crazy/

 

[SCNCY]

http://www.washingtonpost.com/blogs...erlands-currency-is-going-historically-crazy/

Thanks, so basically, the Swiss were keeping their currency and the Euro at a constant exchange rate, but have now decided to stop doing that.

 

[kickout]

Thanks, so basically, the Swiss were keeping their currency and the Euro at a constant exchange rate, but have now decided to stop doing that.

100% correct

 

[brett108]

The Euro has been holding back the value of the Franc.

I understand that but why is the Franc so valuable? Like I pointed out, negative interest rates! It just seems like justifications for the weakness of other currencies are not being applied to the Swiss, which means it really is a speculative market more than anything. I doubt the fact they don't get involved in wars really has any impact on the currency outside of an ongoing world-wide conflict.

 

[kickout]

I understand that but why is the Franc so valuable? Like I pointed out, negative interest rates! It just seems like justifications for the weakness of other currencies are not being applied to the Swiss, which means it really is a speculative market more than anything. I doubt the fact they don't get involved in wars really has any impact on the currency outside of an ongoing world-wide conflict.

IMO it speaks to the situation in Europe. Corporations/Banks do not want to risk there money in the European markets; rather, they will pay the swiss national bank to keep there money. To me that means there is very little faith that Europe has a stable future (i.e see Greece, Spain, Portugal, Italy). All have a financial collapse just waiting to happen

 

[dmclone]

I understand that but why is the Franc so valuable? Like I pointed out, negative interest rates! It just seems like justifications for the weakness of other currencies are not being applied to the Swiss, which means it really is a speculative market more than anything. I doubt the fact they don't get involved in wars really has any impact on the currency outside of an ongoing world-wide conflict.

In the last year the euro is down 15% against the dollar. If the Franc wouldn't had been so tied to the euro, you wouldn't have seen this big of decrease in one day.

 

[somecyguy]

There is no trust in the Euro right now. And once/if QE begins, the bottom is going to drop further. Even the yields on US debt are damn near zero. They predicted 1.14 to 1 on the Euro by the end of the year and it may happen this month.

 

[SoapyCy]

What would happen if the US just stopped "creating" new money and relied on what is out there?

 

[dmclone]

What would happen if the US just stopped "creating" new money and relied on what is out there?

No one knows for sure because different things have happened in the past.

 

[somecyguy]

If I'm a manufacturer in Europe, I'm likely salivating at potential export possibilities to the US right now. Swiss manufacturers excluded of course. Nestle itself took a multi-billion dollar smack on its cap overnight.

 

[dmclone]

If I'm a manufacturer in Europe, I'm likely salivating at potential export possibilities to the US right now. Swiss manufacturers excluded of course. Nestle itself took a multi-billion dollar smack on its cap overnight.

I didn't realize they made anything in Europe besides BMW's :twitcy: