Swiss franc scraps euro peg

worldtraveller

Masomnia wrote: »

I did wonder who would benefit. Presumably the EUR has been worth 1.20 CHF ish since the cap was imposed, who would bet on the CHF rising when there's a cap? Is there any reason to?

I'm guessing that with the franc soaring to record levels against the euro, Swiss-based importers and consumers are likely to reap the reward of cross-border spending, especially in neighboring France, Germany & Italy and therefore side-step the notoriously high prices in their home country.

worldtraveller

Interesting report on an interview with Ernst Baltensperger, a former adviser to the Swiss National Bank, last Sunday, three days before the drop of the peg:

http://www.swissinfo.ch/eng/snb-may-consider-changing-exchange-rate-ceiling/41210794

Now the political pressure is increasing to drop the peg, the central bank advisor said in the interview. There is a danger that the central bank will not be able to reduce its currency reserves quickly enough, and such a peg may lead to undesirable developments that will be difficult to correct, Baltensperger argues in the interview.

Pincher

That's lucky, saw some not too expensive deals for Graubünden.
Now the ski pass and food will be 30% more. Back to the cheap Eurozone.

Graham_Devon

purch wrote: »

Looks like they are preparing themselves for the ECB starting QE in a big way :eek:

I think it was Goldman Sachs that was mentioned as predicting this yesterday.... they predict a €5.5tn QE programme, starting off with around €2.2 - 3tn

Crashy_Time

Graham_Devon wrote: »

I think it was Goldman Sachs that was mentioned as predicting this yesterday.... they predict a €5.5tn QE programme, starting off with around €2.2 - 3tn

Should be fun, it will fail spectacularly and there will be even more volatility going forward.


To be really honest, Germany isn`t going to go with the sort of numbers quoted there are they? Total non starter IMO.

DTDfanBoy

I haven't seen any UK banks paying these sort of returns recently

Thank You for banking Swiss Sir :money:

Thrugelmir

Interesting to see the fall out.

Lewis Hamilton, Phil Collins, Nestle, Rolex, Starbucks, Swatch all spring to mind.

Generali

Thrugelmir wrote: »

Interesting to see the fall out.

Lewis Hamilton, Phil Collins, Nestle, Rolex, Starbucks, Swatch all spring to mind.

What's the fall out?

Anyone holding Swiss Francs has just had a ~20% uplift in capital value overnight. Anyone with a short CHF position has had a similar loss (although also refer to my previous post).

I can't imagine that Mr H or MR C are even holding large CHF positions, it's more likely that they hold Sterling or Dollar accounts (or most likely both) with Swiss banks.

HAMISH_MCTAVISH

Generali wrote: »

What's the fall out?
.

Quite severe as it happens.... For the Swiss.

"This will have a violent impact on exporters, especially companies which produce in Switzerland, such as watchmakers. A wave of profit warnings will come, and also a wave of cost-cutting and outsourcing efforts. Companies can adapt to gradual moves in currencies, but today's swing is just too brutal and the consequences will be dire."

http://www.reuters.com/article/2015/01/15/markets-stocks-europe-idUSL6N0UU2OS20150115

In amongst all the Swiss trade organisations and business groups holding crisis meetings and warning of bankruptcies and rising unemployment, was this little gem in a letter from the head of watchmaker H Moser to the head of the Swiss National Bank.....

“I trust you have a strong plan that will help all of us in the long run, because otherwise, along with many other wonderful Swiss creations, H Moser watches may just have become very, very, very rare.

Over 95% of our watches are sold to people outside of Switzerland, and the first retailers called the same day to cancel orders.”

http://www.valuewalk.com/2015/01/swiss-franc-business/

BobQ

Generali wrote: »

Maybe. The impact on Polish individuals with CHF mortgages is likely to be large but the impact of that particular problem on the banks is likely to be small as the CHF mortgage book is about 0.2% of Polish GDP.

There could well be big losses amongst the largest FX brokers (HSBC, Citibank, Deutsche Bank, JP Morgan, Barclays & UBS). The reason? Not that they have made losses on speculative sales of CHF but that their clients have.

The way it works is this. ........

Great reply, I assume this is indicative of your day job. Either way, a fascinating insight into the GFC!