The surprise decision of the central bank to release the Swiss franc from the threshold with the euro has led to a sharp reaction on assets Swiss
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The Swiss Central Bank has decided to cancel the roof fixed to the franc against the euro to 1.2. Immediate reactions in the international markets. With the fall of the Zurich stock exchange, the lows and the euro rally franc. Break down the large exporters.
To curb an excessive rise of the franc, the Swiss central bank, along with the elimination of the roof, has decided to cut rates, reducing by half a percent discount rate to -0.75 % and lowering the same way the fork of the Libor rate now ranges between -1.25% and -0.25%.
The roof decided in 2011
The Snb, the Swiss central bank, in 2011 he took the decision to introduce the ceiling of 1.20 francs on the euro, to protect exports and to stop the overvaluation of the Swiss franc, which has become, in the midst of the financial crisis, a
safe haven for millions of investors.
Switzerland, with the euro that would explode, had become a safe haven, but the Swiss authorities have had to run for cover to avoid the superfranco stifle the economy. Hence the decision to introduce the ceiling, a choice that the Swiss in recent years have always confirmed, to the point that a month ago, the central bank said it was ready to defend with “utmost determination” the ceiling on foreign exchange. Today, however, the change of course.
The Swiss authorities: the Swiss franc was at risk
The Swiss central bank said that the measure had been taken in 2011 in “exceptional” circumstances and that now the situation has changed. The Swiss economy has been strengthened and the depreciation of the euro against the dollar would have risked too much to weaken the franc. So we preferred to disengage from the euro, eliminating the roof.
Analysts: a decision taken in view of the decisions of the ECB
The decision of the Central Bank of Switzerland answer – according to analysts – the need to avoid any failure of the defense of the floor, ie the threshold to 1.20 in the exchange rate between the euro and the Swiss franc, on the occasion of the moves of the European Central Bank next week. The ECB expects the launch of the so-called quantitative easing, or the purchase of government bonds. For analysts Ig Forex. “The feeling that the Snb not have been more able to defend the floor had already emerged last week – it says – when it had spread the news of the new record reached in foreign currency by the Central Bank (nearly 500 billion dollars).
The sales of Swiss francs on the market by the Central Bank
of recent months have increased the level of reserves in dollar and euro, at the expense of the national currency. “The market, however, not expect such a decision, at least this week. We believe, in fact, that the Snb has decided to anticipate a possible failure in the defense of the floor that could have happened January 22, when the ECB would announce the new plan. In fact, just today the SNB’s move could reinforce a view of an intervention by the European Central Bank next week. It was, therefore, only a matter of time. “
collapses, major exporters On the square
Swiss collapsing large exporters such as Swatch (-16.5% ), Richemont (which produces the Cartier jewelry) of 15.7%, Credit Suisse 13%, the pharmaceutical Roche 12%, UBS by 11.6%, the Holcim cement by 13.2%.
UBS: “Severe impact on the economy”
The decision to remove the cap on the franc exchange rate between the euro and by the Swiss central bank will have a “big” negative impact on ‘ economy of the country. He said, according to a report in Bloomberg, the Global Chief Investment UBS, Mark Haefele, that the decision came “completely by surprise” and the markets will remain “extremely volatile” in the short term.
This ad by Swatch: “I have no words”
Thud Swatch on the Zurich stock exchange, where it releases 15% to 393.2 Swiss francs. I have no words. This is the comments made by the CEO of the Swiss watch manufacturer, Nick Hayek, on the decision of the Swiss central bank to leave the roof of the exchange rate between the franc and euro, as reported by Bloomberg. Hayek speaks of a tsunami for the export industry, for tourism and for the entire country.
European stocks volatile, Piazza Affari off After
tacked negatively, European stocks are hurrying, although volatility reigns.
Take off Piazza Affari in mid session, with the FTSE MIB that earns 2.4%, driven by expectations for quantitative easing from the ECB but also from the recovery of oil back above $ 50 a barrel. Eni leaps of 3.85%, 5.96% and Intesa Tenaris, which earns 3%, driving the increases between banks.
The ‘Euro breaks through the minimum 11 years
The move of the Swiss bank has caused a severe depreciation of the euro against the Swiss franc, the euro / franc stood at 1.04 compared to 1.20 before the decision of monetary authorities
Swiss. The cross between the Swiss franc and dollar fell below parity. L ‘euro broke through the minimum by more than eleven years in the cross with the dollar. The single currency has fallen up to $ 1.1575, a level not seen since November 2003 before recovering to around $ 1.1680.
The refuge of government bonds
Investors take refuge in government bonds, such as German Bunds whose performance shows a marked decline. Even the ten Swiss sees collapse performance.
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