It is a historical earthquakes and the biggest crash in the history of the common currency. The Swiss National Bank (SNB) are imported more than three years ago € minimum rate of 1.20 francs to normal. “The minimum course was introduced at a time of massive overvaluation of the Swiss franc and the largest uncertainty in the financial markets,” said the SNB in a statement: “The Swiss franc remains indeed highly valued, but the overvaluation has reduced overall since the introduction of the minimum exchange rate.”
There were scenes of panic on the currency markets. The euro plunged by nearly 30 percent against the franc in the tip. That was the biggest loss since floating exchange rates in 1971. The surprising action made in the financial world for astonishment and responses. At times threatened the electronic forex trading systems, which are designed for daily transactions of 5.3 trillion dollars to collapse.
Against the dollar, the euro fell to 1 1575 Dollar – the lowest level since 2003. The turmoil in the currency markets also attacked on the stock exchanges on. The Dax lost about in the top two percent.
Market observers even spoke of a “financial tsunami”. Even experienced Forex traders can not remember having experienced such dramatic currency crash within a few minutes. For example, when the US champion George Soros in September 1992, the Bank of England successfully wrestled down and kicked the pound from the European monetary system, the Sterling fell on a day to just three per cent. Overall, the British currency was then comparatively modest 15 percent within two weeks.
Even in emerging markets such crashes are hardly conceivable. Argentine peso crashed early 2014 because of economic problems, a mere 15 percent. And during the Asian crisis of 1997/1998 saw the Thai baht faint to “only” 24 percent. At most currencies of banana republics, which are in a hyperinflation, such drastic crashes as that of the euro know on Black Thursday.
This is why many experts speak of a shock for the international monetary system, which also is reflected by the price of gold has risen by almost three per cent in the sequence of events. The biggest faults found, however, in Switzerland even take place. The blue-chip index SMI lost in the top 14 percent. That was the biggest loss in its history. The companies listed there lost along an approximately CHF 140 billion in market capitalization. This corresponds roughly to the Swiss economic performance of a quarter. The share turnover was nearly four times by noon as high as on an entire average day.
At the same time, investors fled in federal bonds. The demand for safe bonds is now so high that even nine-year Swiss government bonds have a negative return. Say, the Swiss State gets by investors even more money if he borrows money from them for nine years.
“It’s all on the wrong foot caught, “said Lee Oliver, currency expert at the American banking giant Citigroup. In fact, not a single expert is expected to take this step. This is a survey of the data provider Bloomberg under 22 leading Bank economists.
Kathleen Brooks, an expert in Forex trading firm Forex.com, spoke of the “Switzerland shocker”. From a seismic step, George Buckley spoke of the Deutsche Bank: “It is inconceivable that an institution like the Swiss central bank terminated so long practiced policy with a stroke of the pen I could not have dreamed that monetary authorities can surprise the markets so. . “
The surprise was all the greater as the Swiss have an image as a steady money nation, where stability above all else. The SNB action, however, was described by leading currency strategists as “chaotic”.
Experts suggest the radical step as a vote of no confidence against the euro. After binding to the single currency caused a kind of common destiny between euro-zone and Switzerland – an alliance through which the Confederates were increasingly unhappy in recent months
you had any reckless action by the European Central Bank (ECB) endorse – the motto: mitgehangen, caught. And they had to stem the billionaire speculators, who kept trying to attack the minimum euro exchange rate.
But obviously it was the Swiss now too colorful. They are no longer willing to endure the antics of the ECB. The time of decoupling appears to have been chosen at random. For next week, the ECB is likely to announce its meeting on the purchase of government bonds on a large scale. This meant a more radical monetary easing.
“The Swiss monetary authorities thus appear to have pulled the ripcord before their counterparts in Frankfurt a broad-based government bond purchase program on the legs make, “says Soren Hettler, Currency Analyst, DZ Bank. There was a risk that the SNB must continually intervene and Currency mountain accumulate, they hardly could pay off.
While the Swiss had in December preventive announced for January negative interest rates of minus 0.25 percent, in order to avert larger inflows. However, they would have under ECB action to make additional interventions.
How much were the interventions, making the total assets of the SNB significantly. This has ballooned monstrous since the start of operations in 2011. With 525.3 billion francs she is more than three times as large as in 2008. Thus the Swiss monetary authorities in relation have “print money” almost as much as the US Federal Reserve (Fed).
In terms of economic power is the SNB even more aggressive procedure than the Americans. While these have inflated its balance sheet at 27 percent of gross domestic product, it bring Swiss because of purchases now at 85 percent. This also means that the SNB has far more risks in the balance sheet when the Fed. Above all, the SNB has now a lot of euros on their books. After the Euro-fall, the losses
should be immense. But for many experts are in the step of SNB not only a vote of no confidence against the euro , Instead, make the hasty action of the Swiss clear that central banks are not omnipotent and have limits. Many investors have learned another lesson. One should never believe a central banker. Finally, the SNB chief had called the Euro-minimum limit the Heart of its monetary policy in December.
For high net worth private investors, the financial center Switzerland loses its appeal. Although the franc has gained significant value, but they must continue to pay a penalty interest rate of 0.75 percent on their deposits. Den has the SNB on Thursday also announced to keep more capital from abroad.
How hard the SNB, the historical action should be like, show the harsh reactions of the Swiss economy. “The SNB move today is a tsunami for the export economy and tourism, ultimately for the entire country,” for example, wrote Swatch Group CEO Nick Hayek in an e-mail. “I simply have no words.”
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