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-   -   Weak Swiss Franc (https://www.englishforum.ch/finance-banking-taxation/5671-weak-swiss-franc.html)

Pekka 06.04.2007 10:10

Weak Swiss Franc
 
Hi,

This is one of those things that really does not currently have any influence on my life, but seems to bother me every now and then.

Coming from a country, I have the bad habit of looking at the currency rates every now and then. Our SFr. or CHF or whatever you wish to call it is not doing very well against the . Yes, I know the influence on export etc. but to me it seems to mean that I earn less than before. :msnshock: This is, I am stupid enough to convert prices to even though I do not currently have any income in .

Does anyone else have the same kind of (mental) problem? If so, how do you manage it? Can we find any good impacts on personal level in this situation (forgetting the exports etc.)? Could we even benefit somehow, having the ability to do our finances in both currencies (bank relationship in both and CHF land)?

Pekka

litespeed 06.04.2007 11:23

Re: Weak Swiss Franc
 
It is not just against the Euro either. I am about to go back home to Sydney in the first time in 5 years, and of course, the Pacific Peso is about to reach parity with 'ol Francy for the first time in years.

ExoticLatic 06.04.2007 11:34

Re: Weak Swiss Franc
 
I'm loving it on the other hand, nothing better than a strong pound when you go to Switz :D

tgpt 06.04.2007 11:57

Re: Weak Swiss Franc
 
We have just been trying to treat the Franc as if it was equal to the dollar, thus encouraging us to spend carefully. :)

Pekka 06.04.2007 16:05

Re: Weak Swiss Franc
 
I have thought about one good thing in this situation. We still have a flat in Finland and compared to CHF it keeps growing in value. At the same time here the prices somewhat steady. So, if my long term plan is to stay here and perhaps buy property, I will benefit from weak CHF. Other than that, plus the fact that I do not believe that the high property prices in Helsinki will hold for long, I will lose money.

Any speculations on how the value of CHF will develop? Maybe our friends across the atlantic organise something in the middle east and cause enough instability to streghten the franc? Or is this a realistic scenario anymore?

Gav 06.04.2007 16:39

Re: Weak Swiss Franc
 
Quote:

Originally Posted by Pekka (Post 49036)
I have thought about one good thing in this situation. We still have a flat in Finland and compared to CHF it keeps growing in value. At the same time here the prices somewhat steady. So, if my long term plan is to stay here and perhaps buy property, I will benefit from weak CHF. Other than that, plus the fact that I do not believe that the high property prices in Helsinki will hold for long, I will lose money.

Any speculations on how the value of CHF will develop? Maybe our friends across the atlantic organise something in the middle east and cause enough instability to streghten the franc? Or is this a realistic scenario anymore?

I wish I knew. I've got funds in CHF and the fact that it's weak is making me hold back from moving them into something more 'useful' to me. On the other hand, I could get a better rate of interest from the bank if I had them converted now.

What normally makes the Franc go up in value is a good old international crisis or generally poor economic situation in the Western economies. The Franc is very much a 'safe haven' currency that people buy into when they get nervous about the major trading currencies.

However, with the introduction of the Euro making a triangle of global 'strong' currencies then it's difficult to say if investors won't simply flit between Dollar, Pound and Euro leaving the Franc languishing.

jclay 06.04.2007 16:53

Re: Weak Swiss Franc
 
Quote:

Originally Posted by Pekka (Post 49036)
Any speculations on how the value of CHF will develop?

Here's one analysis that sees more room for decline vs. the Euro: http://www.gocurrency.com/outlook-usd-chf.htm

Quote:

Originally Posted by Pekka (Post 49036)
Maybe our friends across the atlantic organise something in the middle east and cause enough instability to streghten the franc? Or is this a realistic scenario anymore?

Unfortunately I'd say it's all too realistic, which is painful to me both from a political standpoint, and as someone who earns USD but spends CHF and has been beaten over the head repeatedly for the last few years...

ExoticLatic 06.04.2007 17:12

Re: Weak Swiss Franc
 
Slightly off-topic, but according to Russian analysts, the USA are supposed to launch a strike against Iran today, with tactical nukes... The report is doing the rounds on the tinternet :eek:

David H 06.04.2007 17:18

Re: Weak Swiss Franc
 
Quote:

Slightly off-topic, but according to Russian analysts, the USA are supposed to launch a strike against Iran today, with tactical nukes... The report is doing the rounds on the tinternet
Don't be daft!

ExoticLatic 06.04.2007 17:26

Re: Weak Swiss Franc
 
Don't worry, I don't believe a word of it ;)

DC_in_Hombi 07.04.2007 10:58

Re: Weak Swiss Franc
 
"Weak Swiss Franc"
2.4 to the GBP is about spot on. I have always calculated at this rate.

I remember in 2000 it was up around 2.7 I think that was weak.

DC

BeastOfBodmin 07.04.2007 18:48

Re: Weak Swiss Franc
 
Quote:

Originally Posted by Pekka (Post 48999)
Does anyone else have the same kind of (mental) problem? If so, how do you manage it? Can we find any good impacts on personal level in this situation (forgetting the exports etc.)? Could we even benefit somehow, having the ability to do our finances in both currencies (bank relationship in both and CHF land)?

Pekka

After being here only 7 months, I do keep trying to convert from CHF to UKP. Just after I came here in late August 2006, the Bank of england put up interest rates and the CHF went from about 2.35 to 2.45 to the pound. I felt like I'd had a pay cut!

Now I realise that is a stupid attitude. What I try to do instead is compare costs as a proportion of my net salary.

For example, I paid a total of 32.9% in income tax and NI in the UK. Here, I pay only 25.3%. My rent in the UK was 25.2% of my net, and here it is about the same, at 25.4%.

As for currency rates, the important thing is the interest rate paid on a given currency. For example, I can get 5.15% to 5.65% gross interest on accounts held in sterling, versus about 1% on CHF. If you get an account at somewhere like xe.com you can convert currencies at very good rates. IMO that is a good thing to do with spare cash that you can afford to leave alone for 6 months to a year.

AbFab 07.04.2007 19:13

Re: Weak Swiss Franc
 
When I came here in 1989 the rater was CHF3.25 = 1, by 1993 this was CHF1.95 = 1.

In the 1950s the CHF20 note was called 'The Pound' as that's how many there were to a pound.

The Swiss National Bank and their gold reserves know what they are doing. I would say it is more a strong euro and pound, than weak CHF at the moment - which won't help those paid in CHF and wanting to spend in other currencies. But history shows the franc will be back...

You can see 15 year variations of assorted currencies here:
http://fxtop.com/en/historates.php3

Pekka 10.08.2007 10:39

Re: Weak Swiss Franc
 
Quote:

Originally Posted by AbFab (Post 49206)
But history shows the franc will be back...


I think it has started.

Richard 10.08.2007 10:47

Re: Weak Swiss Franc
 
Quote:

Originally Posted by ExoticLatic (Post 49049)
Slightly off-topic, but according to Russian analysts, the USA are supposed to launch a strike against Iran today, with tactical nukes... The report is doing the rounds on the tinternet :eek:

I am sure you wanted to say on t'internet;)

Gav 10.08.2007 18:18

Re: Weak Swiss Franc
 
Quote:

Originally Posted by Pekka (Post 91627)
I think it has started.

Looks like the 'butt of the carry trade' times of the Swiss franc may be over alright.

From yesterdays Torygraph:

http://www.telegraph.co.uk/money/mai.../bcnecb109.xml

"The Japanese yen and the Swiss franc both strengthened as flight from risk caused investors to unwind "carry trade" bets, whereby they borrow money at rock-bottom rates in Tokyo or Zurich to chase higher yields elsewhere."


Looking at xe.com shows that indeed the Franc has strengthened over recent times. Looks like the turmoil in the financial markets has had the exepected effect of strengthening the Franc.

Gav 21.08.2007 11:36

Re: Weak Swiss Franc
 
Woooah - looks like the Franc is on the rise (or Sterling is on the way down, probably a bit of both)

Latest exchange rate from www.xe.com :

Live rates at 2007.08.21 09:28:16 UTC
1.00 CHF = 0.420126 GBP

Switzerland Francs United Kingdom Pounds 1 CHF = 0.420126 GBP 1 GBP = 2.38024 CHF

I've seen it as low as 0.408 back at the start of July .. Wonder how high it can go before I convert my stack of Francs back to Sterling?

On the other hand, given some of the things I hear about the British market outlook maybe it'd be better left in Switzerland/Francs just for security.

If the Bank of England go for low interest rates to save the necks of borrowers/lenders sterling savers could see their pot of cash evaporate away with inflation.

post from holland 21.08.2007 15:20

Re: Weak Swiss Franc
 
$$$$$$
P F H

AbFab 21.08.2007 15:31

Re: Weak Swiss Franc
 
Quote:

Originally Posted by post from holland (Post 95549)
<snip>

any feedback ?
thanks
P F H

I think if you want to do a 5 year gamble, you'd be better off trying a US dollar account. Not only would the interest rate be higher, but in 5 years the dollar could well have bounced back...

Fraser 21.08.2007 17:40

Re: Weak Swiss Franc
 
Quote:

Originally Posted by AbFab (Post 95556)
I think if you want to do a 5 year gamble, you'd be better off trying a US dollar account. Not only would the interest rate be higher, but in 5 years the dollar could well have bounced back...

"bounced back"?!

Bounced back from what? As long as the US keep pumping out more and more money, there's no way that currency is going any other way than down.

Right now the CHF is artificially low and will strengthen against the dollar over time.

Meet me back here in five years to see if I'm right :-)

post from holland 21.08.2007 17:56

Re: Weak Swiss Franc
 
any opinion welcome

Fraser 21.08.2007 18:00

Re: Weak Swiss Franc
 
Quote:

Originally Posted by post from holland (Post 95645)
back to my question: can anybody comment on the little calculation i did please ?

i dont see it as a gamble, i simply want overload som CHF to a euroaccount, because i intend (as many here) to go back to euroland in 3 to 4 years time and dont wanna savingsaccount with just 1% interest.
and wonder if now is a good time to do it and only suffer minor currency loss.

any opinion welcome

If it's euros you want, then it's euros you should have. You'll not carry any currency risk, other than the fact that you might make more money over the 3-4 years if you kept your cash in swiss francs and the CHF strengthened against the EUR. I'm considering doing exactly the same thing as you at present and I reckon it's worthwhile.

post from holland 21.08.2007 19:08

Re: Weak Swiss Franc
 
hanging on just a little longer.

GVA offline 21.08.2007 19:40

Re: Weak Swiss Franc
 
The CHF will probably appreciate against both USD and EUR over the coming months. The current rise is mainly due to USD weakness and the unwinding of the carry trade.

muze7 21.08.2007 20:13

Re: Weak Swiss Franc
 
You can also open a Euro account in Switzerland, for example Postfinance offers 1.825% I think. This is what I am doing as you can withdraw Euros without cost at the ATM machine while here, which is handy before going on holiday, and you can also transfer CHF to Euro without cost, so you can transfer small amounts regularly, so you spread your exchange rate risk rather than transferring large sums and risking that the CHF gains even more.

Then when you leave you transfer the Euros to a European bank without exchange losses. There is an offer for 3.6% interest until the rest of the year on euros in an electronic savings account at Postfinance.

By the way, where do you get the 3.7% offer in the Netherlands from? That seems high for a savings account without withdrawal restrictions.

Polorise 21.08.2007 21:01

Re: Weak Swiss Franc
 
[quote=muze7;95668]You can also open a Euro account in Switzerland, for example Postfinance offers 1.825% I think. This is what I am doing as you can withdraw Euros without cost at the ATM machine while here, which is handy before going on holidayquote]

Muze, wouldn't it be more pracrical to put into a higher interest yield Euro account ? UBS & Credit Suisse, you can draw Euro at no extra cost with your normal conto card.
Or am I being dumber than usual on this, something I'm missing ?

SWilkinson 22.08.2007 04:34

Re: Weak Swiss Franc
 
Quote:

Originally Posted by BeastOfBodmin (Post 49205)
After being here only 7 months, I do keep trying to convert from CHF to UKP. Just after I came here in late August 2006, the Bank of england put up interest rates and the CHF went from about 2.35 to 2.45 to the pound. I felt like I'd had a pay cut!

Now I realise that is a stupid attitude. What I try to do instead is compare costs as a proportion of my net salary.

For example, I paid a total of 32.9% in income tax and NI in the UK. Here, I pay only 25.3%. My rent in the UK was 25.2% of my net, and here it is about the same, at 25.4%.

I also found myself doing the same thing, you know...."How much! That's 20 quid!!!" :D It's taken a while but I now try to do the same as you do!

BeastOfBodmin 22.08.2007 07:56

Re: Weak Swiss Franc
 
Quote:

Originally Posted by post from holland (Post 95549)
hi , also interested in this. suppose i brought 10.000 CHF to a euro savings account... would this be beneficial because the savingsaccount bring more interest?

example bringing CHF to an euro account to profit from higher saving accounts

example
savings in CHF : 10000 CHF at XXX savingsaccount against 1.5 % interest
in 5 years 10'772.84
increase of 772.84 chf

bringing 10000 CHF to Euro account=6160 EURO (calculated at 21 august , rate 1 CHF= 0.616 EURO)
in 5 years at rate 3,75% interest at savingsaccount XXX
7'316.15
increase of = 1'156.15 euro

Nice analysis :)

Quote:

Originally Posted by post from holland (Post 95549)
now how do i compare ??

Tricky question, IMO. Because over 5 years you don't know what the exchange rates will be like. Maybe ask something like "What must the exchange rate be, after 5 years, so that my Francs + interest are worth more than the Euros + interest?".

Also, don't you think you should consider the tax on the interst gained also? e.g. UK @ 20%, Switzerland @ 35%.

Quote:

Originally Posted by post from holland (Post 95549)
converting the 1156 euro to chf = 1877 CHF (calculated at 21 august , rate 1 euro= 1.6234 CHF today) hence a difference in growth of over 1000 CHF, if you would convert today . of course it all depends what the rate of chf would be in 5 yrs

please note it is JUST an example.... ofcourse there is bank x and bank y with better / different rates.
these happen to be some i know. both saving accounts are type: no fixed periods, you can always withdrawl your money without penalties

any feedback ?
thanks
P F H


Guest 22.08.2007 08:21

Re: Weak Swiss Franc
 
...and a primary driver of exchange rates is relative interest rates.

dave

Quote:

Originally Posted by BeastOfBodmin (Post 95748)
Tricky question, IMO. Because over 5 years you don't know what the exchange rates will be like. Maybe ask something like "What must the exchange rate be, after 5 years, so that my Francs + interest are worth more than the Euros + interest?".


post from holland 22.08.2007 08:55

Re: Weak Swiss Franc
 
..........................................

Richard 22.08.2007 10:04

Re: Weak Swiss Franc
 
Quote:

Originally Posted by DaveA (Post 95753)
...and a primary driver of exchange rates is relative interest rates.

dave

But the primary driver is balance of trade figures... Hence the drop in value of the US dollar over the past years despite high interest rates...

post from holland 22.08.2007 11:56

Re: Weak Swiss Franc
 
i just looked in my ..oops dropped my cristal ball :dunno:

muze7 22.08.2007 20:14

Re: Weak Swiss Franc
 
Quote:

Muze, wouldn't it be more pracrical to put into a higher interest yield Euro account ?
Perhaps you could tell me which? UBS only gives 1% on a Euro savings account. Do you mean term deposits?

Quote:

UBS & Credit Suisse, you can draw Euro at no extra cost with your normal conto card. Or am I being dumber than usual on this, something I'm missing ?
I was told by an UBS adviser that if you withdraw Euro at a UBS machine in Switzerland from a Euro account, you pay 1% of the total. Unless that is person is wrong, that is pretty bad :eek:. No I checked it, the UBS prices pdf says this too! Rip off I say.

post from holland 27.08.2007 15:18

Re: Weak Swiss Franc
 
FYI my financial cristal ball :strengthening of the CHF vs Euro only temporary

Pekka 27.08.2007 18:19

Re: Weak Swiss Franc
 
Quote:

Originally Posted by post from holland (Post 97815)
FYI my financial cristal ball was right: the past strengthening of the CHF vs Euro was only temporary. Euro is now almost back to beginning of jylu.
hope you used the glimps to convert some

I managed to convert some. Calculate the hours I spent speculating and watching the rates, it certainly was not worth it! But what can you do when you are cheap...

post from holland 28.08.2007 08:52

Re: Weak Swiss Franc
 
i also was cheap and only a small amount (gambling on that there will be more glimps in the future)

chuk 28.08.2007 08:56

Re: Weak Swiss Franc
 
I think there's alot more to come, the carry trade is not as effective if not dead soon, placed a FX trade yesterday in the night in the region of 2.41, think the rate will drop alot more, will add more to it at 2.38 or get out at 2.43 ish.

muze7 28.08.2007 15:37

Re: Weak Swiss Franc
 
You mean you think the Franc will gain again? I think so too, I do not think the credit crunch is over yet.

chuk 28.08.2007 21:07

Re: Weak Swiss Franc
 
it's only a opinion but yes I believe that, at this moment the USF/CHF is trying (but not succeeding yet) to break under a nice psychological 1.2000, a lot may depend on whether this goes or not

post from holland 28.08.2007 21:57

Re: Weak Swiss Franc
 
but what will the chf do towards the euro ?


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