Historic turning point of the Central Bank of Switzerland. Catching everyone by surprise, Bern fact reduces the “roof” of the exchange rate fixed at 1.20 francs per euro over three years ago, pushing its currency at the highest, and still cuts the deposit rate into negative territory (-0, 25% to -0.75%), thus reinforcing the thesis of an imminent launch of quantitative easing by the European Central Bank, that the massive purchase of government bonds to be traced back inflation in the eurozone and support the ‘ economy.
Yesterday, the euro sank to record lows against the franc at 0.85 cents before rising to 1.03 francs. Simultaneously, the Zurich Stock Exchange came to lose up to 14% before you store the session with a -8.67%. Today the markets appear calmer. The euro dollar exchange rate, which this morning stop at the low of 1.1629, reflects an increasingly likely intervention of the ECB with quantitative easing measures. The single currency recovered Meanwhile the Swiss franc at 1.0218 (+ 2.5%) after the fall yesterday.
The intervention of the Swiss Central Bank (Snb) comes exactly a week before the next meeting ECB which should be announced the long-awaited Qe, that this move, say the analysts, would trigger a “race to the franc, considered a safe haven, and thus frustrate the efforts of Snb to defend the roof of the change.” And in fact the president of Snb, Thomas Jordan, explained that “it was useless to keep the roof, was no longer sustainable and that this policy could have been carried out only with continuous market intervention” then “we concluded that it was better to get out now that between 6 and 12 months old when the picture could be more difficult everywhere. “
The move of Snb” no worries, but it caught us a little ‘surprise, “said the director general of the IMF, Christine Lagarde, adding: “I was surprised that was not contacted
before. ” And the “dramatic turnaround” of the Swiss central bank, as the Financial Times notes, given that until last month the same Jordan reiterated that the roof franc-euro was maintained at all costs, has had an immediate effect on the currency market and disruptive and on the Swiss Stock Exchange.
“I have no words,” said the CEO of Swatch, Nick Hayek, commenting on the decision of the Swiss Central Bank. “It’s a tsunami for the export industry, tourism, and finally for the whole country,” he stressed. Even the move to UBS ‘shock’ of Snb will have a “great” adverse impact on the Swiss economy.
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