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Old 24.03.2012, 17:48
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how is Switzerland faring with the European economic slowdown?

Just thought I'd put this general question out to those of you in the know. How is Switzerland faring with the economic slowdown? What are the forcasts for the next few years? Will the franc remain strong against the euro or will they act to devalue the franc?

I'd be interested to hear your opinions on the way things are and the way things will be in the next year or two.

Thanks!

David
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Old 24.03.2012, 18:01
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Re: how is Switzerland faring with the European economic slowdown?

Hi, I have been surprised about how well CH is weathering the EU slowdown.
Here are some thoughts on this:

They will try to keep the CHF at the current (1.20ish) level to the EUR. The way they do this will mean more years of very low interest rates and monetary easing. This also means a continuation of real estate price increases (bubble?) and - most likely - inflation at increased levels in 2 or 3 years max. As the Swiss system doesn't deal well with inflation, expect lots of political fireworks in a couple of years.
The wild card here would be a return to significant upheaval in the EUR zone, a renewed demand for CHF and the SNB unable to maintain the 1.20 peg to the EUR. This doesn't seem too likely at the moment.
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Old 24.03.2012, 18:24
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Re: how is Switzerland faring with the European economic slowdown?

As I'm paid in Swiss Francs and I live in France I benefit from the 1.20 ish exchange rate. I know that when the rest of the world worries about stability, the Swiss franc with it's well earned reputation for stability, more and more countries will invest in the Swiss Franc just like they do with the American dollar and for some time the Japanese Yen.

Switzerland's strength stems from it's currency and banking system, and it's comforting to feel "protected" by these facts when we work in Switzerland. I still do not know what will happen with the euro....I feel sometimes that the there is a domino effect which has started a few years ago and will lead to the fall of the euro as a currency. Anyway, I think Switzerland stands to benefit both ways so long as inflation can be kept under control...

By the way I am not an economist but I am interested in what other's think about the stability of the franc.
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Old 24.03.2012, 18:27
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A silly question....what would happen if more and more countries buy Swiss francs as a security measure? Would it have a direct effect on the currency?

http://economicsweekly.wordpress.com...-will-it-work/

Last edited by jrspet; 24.03.2012 at 18:51. Reason: Merging of successive posts
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Old 24.03.2012, 22:44
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Re: how is Switzerland faring with the European economic slowdown?

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Just thought I'd put this general question out to those of you in the know. How is Switzerland faring with the economic slowdown? What are the forcasts for the next few years? Will the franc remain strong against the euro or will they act to devalue the franc?

I'd be interested to hear your opinions on the way things are and the way things will be in the next year or two.

Thanks!

David
Switzerland was hit by the economic slowdown but now will profit by the stabilisation, for example in Germany. The aim of Switzerland is to get the €<>CHF rate up to 1.30 or 1.40 again, in order to improve the Swiss market position in the world.

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Hi, I have been surprised about how well CH is weathering the EU slowdown.
Here are some thoughts on this:

They will try to keep the CHF at the current (1.20ish) level to the EUR. The way they do this will mean more years of very low interest rates and monetary easing. This also means a continuation of real estate price increases (bubble?) and - most likely - inflation at increased levels in 2 or 3 years max. As the Swiss system doesn't deal well with inflation, expect lots of political fireworks in a couple of years.
The wild card here would be a return to significant upheaval in the EUR zone, a renewed demand for CHF and the SNB unable to maintain the 1.20 peg to the EUR. This doesn't seem too likely at the moment.
-
The SNB made it clear that the inflation may rise to 0.6 (NOT 6,0 !) percent within a year. As stated above, the SNB will try to raise the PEG to 1.30 or 1.40. And this even if the inflation gets up to 1% or 2%

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A silly question....what would happen if more and more countries buy Swiss francs as a security measure? Would it have a direct effect on the currency?

http://economicsweekly.wordpress.com...-will-it-work/
-
It would force Switzerland to increase the money printing and to buy more foreign money. While both might raise inflation, the second thing would give more and more power to the SNB.
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Old 24.03.2012, 23:01
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Re: how is Switzerland faring with the European economic slowdown?

the only real threat to the Swiss economy in the near-term is continued noise within the EU about attacking the tax regime that permits foreign corporations to run their income through the country. this is not as big an issue in countries such as Germany or France, but countries such as Spain, Italy and others whose economies are getting pinched by the Euro will make continued noise about capturing additional taxable income within their borders.
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