Dollar loses strength vs the Swiss franc
(GenevaLunch) – The US dollar has sunk to a record low against the Swiss franc on the prospect that the US Federal Reserve will ease monetary policies (more money-printing). The dollar also fell to a 15-year low against the Japanese yen while the Australian dollar surged to a 27-year high against the US dollar.
On 7 October the dollar fell as low as 0.9555 franc on EBS.
The continued rise of the Swiss franc could have a damping effect on the performance of the Swiss economy as cited in June by the federal government’s Expert Group on Economic Forecasts: “Within the context of the present exchange rate, future export growth is likely to be slightly decelerated but not stalled.”
It defines a damping effect as an exchange-rate-related decline in price competitiveness.
According to the group, “the greatest economic risk for Switzerland is still likely to be a suddenly excessive appreciation of the franc in relation to the euro (flight to the franc as a safe haven).”
The Euro has dropped below $1.27 in early trading 9 September after a German member of the European Central Bank, Juergen Stark, told the German government of the ECB’s concerns over German savings banks and the Landesbanken, saying some of them may need more capital. Germany’s public banks were not subjected to the ECB’s “stress tests” in July. German government bond prices rose as investors sought safer assets. The euro was at 128.97 to the Swiss franc at noon 9 September.
Links to other sites: Bloomberg, BusinessWeek
Zurich, Switzerland (GenevaLunch) - The Swiss franc is at near parity with the US dollar following stronger than expected GDP results. The euro, which in the past week has sunk to record lows against the franc, was boosted by remarks by European Central Bank President Jean-Claude Trichet to the effect he does not expect a double-dip recession. Bloomberg reported Thursday 2 September that “the currency climbed 0.5 percent to $1.0111 as of 10:50 in Zurich. It appreciated 0.4 percent to 1.2964 per euro, after strengthening to a record high of 1.2852 on August 31.”
Links to other sites: Bloomberg, Financial Times (31 August), XE exchange rate site
Update 26 August Zurich, Switzerland (GenevaLunch.com) - The Swiss franc rose to a new high as the euro slipped below CHF1.30 Wednesday 25 August. The Swiss National Bank decided earlier this year that it would no longer intervene to halt the rise of the franc after losing more than CHF14 billion from selling francs to slow down the currency’s appreciation. The euro has been under pressure with bond yields soaring in Greece and Irish debt being downgraded. The Swiss franc has been acting as a safe haven for investors worried about Europe and the fear of a double dip recession in the USA.
Yields on 10-year Swiss bonds fell to 1.02% as funds swept into Switzerland. The strong Swiss franc might be good news for those who earn Swiss salaries but it will make it harder for Swiss exporters to compete.
The Wall Street Journal notes in an article published Thursday that the man widely considered likely to become Switzerland’s next finance minister, Johann Schneider-Ammann, is strongly in favour of a weaker franc, and he backed the SNB’s intervention policy earlier this year. Schneider-Ammann is the head of Swissmem, the machinery industry’s association, and he has close ties to industry in general. The current finance minister, Hans-Rudolf Merz, retires in October. Both are centre-right politicians.
Swiss franc balancing act: which way will it go?
Bern, Switzerland (GenevaLunch) – The Swiss franc, much in the news lately as a possible currency of flight from the weakening euro, could have a damping effect on the performance of the Swiss economy.
But it’s not accurate for now to speak of the franc strengthening in real terms, says the federal government’s Expert Group on Economic Forecasts, which nevertheless argues that “the greatest economic risk for Switzerland is still likely to be a suddenly excessive appreciation of the franc in relation to the euro (flight to the franc as a safe haven).
It defines a damping effect as an exchange-rate-related decline in price competitiveness. “The long-term comparison, i.e., since the adoption of the European currency in 1999, of the real exchange rate of the franc in relation to the euro (i.e., the nominal market trend adjusted for inflation) despite the revaluation of the past month does not lie at an above-average level (e.g., still below the level of 2002-2003),” the group notes.
The franc has depreciated in relation to other “significant” currencies such as the US dollar and the Japanese yen since the start of 2010. ” Within the context of the present exchange rate, future export growth is therefore likely to be slightly decelerated but not stalled.”
The Expert Group issues quarterly forecasts for the Swiss government.
“Selected forecasts” is a set of tables issued 8 June by the Swiss finance ministry.
Zurich, Switzerland (GenevaLunch) – The FTSE in London fell to a nine-month low Tuesday in the wake of a drop in Asian shares to a 10-month low over fears about the euro’s weakness, but also geopolitical concerns. ‘Continuing concerns about the impact on global growth of the eurozone debt crisis have now been joined by fears that the Korean peninsula may be sliding towards conflict,” the Financial Times reports. North Korea is reportedly preparing its troops after South Korea’s insistence that the North torpedoed one of its boats.
The dollar is rising, as are commodity prices, and the Swiss franc rose against the euro Tuesday to CHF.70/euro. The latest euro worry is Spain’s takeover Monday of ailing savings bank CajaSur, according to the Wall Street Journal.
Links to other sites: Le Temps, Wall Street Journal
Zurich: ready to shop again
Zurich, Switzerland (GenevaLunch) - The Swiss franc rose against most other currencies Tuesday 11 May, while the euro wobbled: a rise in Swiss consumer confidence boosted the Swiss currency, while doubts surfacing in the wake of the eurozone bailout weakened the euro. The franc has been steadily appreciating against the euro, with the Swiss central bank intervening since March to keep the price from rising too rapidly. It was trading at 1.41 at the end of the day. Six months ago it was at CHF1.50 to the euro.
Spot gold also rose, to its highest price since the Lehman Brothers collapse in 2008: $1,232.40 a troy ounce, as investors appeared to seek safe havens.
Philipp Hildebrand, chairman of the Swiss National Bank, opened a high-level meeting of international monetary system expertsin in Zurich Tuesday. He remarked that “discontent with what is often perceived as excessive exchange rate volatility has been an important source of dissatisfaction with the present international monetary system. What constitutes excessive exchange rate volatility, and whether domestic policies or the international monetary system are at the root of it, is a matter of legitimate debate.”
Historical exchange rate graph, Swiss franc/euro, November 2009 to May 2010
Links to other sites: AFP, Bloomberg/Business Week, Financial Times
Swiss franc rises against dollar, euro
Zurich, Switzerland (GenevaLunch) – The Swiss National Bank Thursday 6 May has reportedly called a halt to the purchase of euros it has appeared to be making for some days. The SNB had been intervening to keep the euro above CHF1.43, possibly because of a 0.9 percent increase in the consumer price index in April, according to analysts questioned by the Financial Times and Reuters. The euro fell by 2 percent in just minutes earlier Thursday to CHF1.41, its weakest point against the franc since the euro was created.
The euro fell to a 14-month low against the US dollar, to $1.2736 on news that the European Central Bank would not offer “new measures to ease the Greek crisis”, Reuters reports.
Good or bad news, depending on which you are spending, buying: Swiss franc, dollar rates
Zurich, Switzerland (GenevaLunch) – The US dollar has slipped below parity with the Swiss franc for only the second time. The dollar fell below the franc 14 March 2008.
The Swiss franc, which has climbed in the past two days, was at 1.0030 against the dollar ($0.9993/CHF1 ) at 17:00 in Zurich Wednesday 25 November, but it dipped slightly to below parity at 18:00. Bloomberg attributes the change largely to the strength of the franc: “The franc has gained 1.6 percent against the dollar and 0.3 percent versus the euro in the past month as some investors bet that signs the economy is recovering may prompt the central bank to stop selling the currency.”
The US Federal Reserve Wednesday released minutes from its 4 November meeting, indicating that it was not overly concerned by the dollar’s fall.
Links to other sites: Bloomberg, FE.com, TheStreet.com, US Federal Reserve
Zurich, Switzerland (GenevaLunch) – The US dollar continued its slide in world currency markets, pushing the price of gold higher. It reached near parity with the Swiss franc, at 1.0048, in trading Monday 16 November, and was virtually at 1.50 euros: 1.4960. Gold rose to $1,132.95 although it later slipped slightly.
Links to other sites: Bloomberg, Financial Times
We're all connected: Swiss economic health depends on the world, says SNB
Zurich, Switzerland (GenevaLUnch) - The Swiss National Bank’s (SNB) is guardedly more optimistic than in June about the outlook for the Swiss economy, it said Thursday afternoon 17 September in its quarterly report, but monetary policy will remain loose in order to stimulate the economy. The central bank revised its GDP (gross domestic product) forecast, saying it expects this to fall by between 1.5 and 2 percent, less steeply than forecast in June (2.5 to 3 percent). The key interest rate range remains unchanged at 0.0-0.75, “still aiming to keep the Libor within the lower end of this range, that is, at approximately 0.25%.” The Libor serves as an indicator of shifts in bank lending rates.
The SNB says it will continue to intervene in currency markets to keep the Swiss franc competitive internationally.
Bern, Switzerland (GenevaLunch) – The Swiss central bank (SNB) will maintain the monetary policy it introduced in March, it announced today 18 June. Its predictions for the Swiss economy continue to be guardedly pessimistic, because of the negative effects the world economy has on Switzerland. The one positive note has been the decline in the prices of commodities, such as oil, but this has contributed to deflation. Swiss prices will decline by 0.5 percent in 2009, says the Swiss state secretariat for economic affairs (SECO) in its report yesterday 17 June.
Zurich, Switzerland (GenevaLunch) - The Swiss National Bank 12 March announced that it is taking steps to lower the Swiss franc against the euro: it is investing in Swiss franc bonds issued by private borrowers, narrowing the range of the benchmark Libor interest rate to 0-0.75% with immediate effect in order to bring interest rates lower, and it is buyng foreign currency on foreign exchange markets. The Financial Times Friday morning leads with the currency exchange move news, citing several analysts who say Switzerland could be setting off a currency war.
Zurich, Switzerland (GenevaLunch) – The Swiss National Bank Thursday early afternoon lowered its three-month Libor target range to 0.5-1.5%, effective immediately, to increase money market liquidity. The bank noted that with lower costs for oil and raw materials, prices should come under control sooner than earlier predicted, and the central bank now expects inflation to fall below 2% before the end of the year.
Zurich, Switzerland (GenevaLunch) – The Swiss National Bank (SNB) Wednesday afternoon announced that it is lowering interest rates, part of a joint action by several central banks: the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, the Sveriges Riksbank and the SNB.
