Switzerland's abrupt decision to stop holding down the value of the
franc may look like capitulation in the face of the much larger European
Central Bank's moves to weaken the euro. That said, there's another
plausible explanation: The Swiss central bank is simply switching fronts
in a global currency war.
The Swiss franc's role as a traditional haven got a boost from the 2011 European debt crisis: Suddenly, everybody wanted francs, not euros. To keep Swiss exporters competitive in Europe, the Swiss National Bank stepped in, buying about 250 billion euros' worth of foreign currency over three years to prevent the value of the franc from rising above about 0.83 euro. In 2013, 54.9 percent of Swiss exports went to the European Union, so pegging the franc's rate to the euro was the natural course of action.
Read more Click Here / www.trade4x.net
The Swiss franc's role as a traditional haven got a boost from the 2011 European debt crisis: Suddenly, everybody wanted francs, not euros. To keep Swiss exporters competitive in Europe, the Swiss National Bank stepped in, buying about 250 billion euros' worth of foreign currency over three years to prevent the value of the franc from rising above about 0.83 euro. In 2013, 54.9 percent of Swiss exports went to the European Union, so pegging the franc's rate to the euro was the natural course of action.
Read more Click Here / www.trade4x.net
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