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Suddenly, the Swiss franc is appreciating again

The Swiss franc is once again under appreciation pressure. On Tuesday, a week ago, a Euro cost only 1.1225 francs. Today is Thursday, he is located at 1.12 fran

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Suddenly, the Swiss franc is appreciating again

The Swiss franc is once again under appreciation pressure. On Tuesday, a week ago, a Euro cost only 1.1225 francs. Today is Thursday, he is located at 1.12 francs per Euro.

About 1 percent of The Swiss franc lost: the Euro in the last week. Graphics:

the reversal in The monetary policy situation and renewed fears about the economy are the causes. The Swiss franc benefits from the fact that the Euro is falling again in favour with Investors and at the same time the Dollar suffers from the fact that the – albeit modest – have smashed interest rate fantasies. The last revaluation boost for the Swiss franc occurred on last Friday, as the interest rate curve in the USA was inverse, long-term bonds, so suddenly, lower yields on short-term money market rates.

in Parallel with the price of crude oil

"the fact That the Swiss franc-Euro exchange rate falls, reflecting the convergence of global Interest rates," said Kamal Sharma, currency strategist from Bank of America ML in London. The interest moved back in the direction of the funding currencies of low interest rate currencies for funding Carry Trades as the Yen and the Swiss franc. Both benefited.

On the other hand, explains Sharma, offsetting the disappointing economic Outlook, no other currency as much as the Euro. In addition, the one or the other of Brexit-a hedge of the games of a role and let the Swiss franc against the common currency to appreciate.

How closely the fears about the economy affect the Swiss franc, the fact that he moves since last summer, parallel to the price of crude oil. Every Time the barrel price drops significantly, it is a Signal that the world should the economy weaken, which in turn leads to losses in the equity markets. Each Time the Swiss franc-Euro exchange rate falls as a result. The relationship also works in reverse: to return the risk appetite of investors, because the economy be the data better, and Oil becomes more expensive, the Euro and the Swiss franc weakens.

the price of Oil and the Swiss franc

image to enlarge

The reaction has been striking. This also has to do with the fact that you took many investors by surprise. In the last few weeks, as many investors were "Short Swiss francs" and "Long Oil" is positioned as for a long time. The statistics of the futures exchange in Chicago. The bad economic data and the interest of a political turnaround in Europe and America, forcing many, their commitment to resolve.

Worldwide Frank demand

watching How long the Swiss national Bank (SNB) before it intervenes on the foreign exchange market, is an open question. Most analysts expect a first resistance only, if the exchange rate falls below 1.10 francs/ Euro. That is, it has confirmed its assessment of the situation last week. For two years, is holding you back.

SNB not intervened

image to enlarge

Last year, they acquired only for 2.3 billion Swiss francs of foreign exchange. In comparison to previous years, the "Peanuts". The currency reserves make up 16 percent of the gross foreign assets of the Switzerland, that was the end of 2018 4785 billion Swiss francs (see graph). The SNB announced this week. Mathematically, the Per-capita foreign asset in order to 564'000 CHF (cf. table).

division of the Swiss foreign assets

image to enlarge

foreign assets Switzerland

image to enlarge

The current-account surplus widened 2018 21 to 71 billion francs. Switzerland remains a huge worldwide Frank needs to face that drives the price tends to be. By 2017, the SNB had to massively sell Swiss francs, in order to establish a balance. 2018 from the raft, however, without SNB help net capital and slowed the appreciation. The US tax reform caused US corporations to curtail in this country, the balance sheet. Interesting, what are the forces countering henceforth, the structural upward pressure.

(financial and economic)

Created: 28.03.2019, 16:24 PM

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