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Old 25.05.2010, 08:26
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How Does the Falling Euro Affect the CHF?

With Greece's financial crisis and worries about Spain now, the Euro is falling quickly, but how will this affect the Swiss Franc, in relations to other major curriencies? Will the CHF become stronger, because Switzerland is independent from the Euro?..or will the CHF fall too, because Switzerland is anyway physically in the middle of Europe and is tied in alot of ways to Euro-zone countries?

...and same question applies other "independent" currencies in Europe, like the UK Pound, Swedish Krooner, etc..
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Old 25.05.2010, 08:40
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Re: How Does the Falling Euro Affect the CHF?

The swiss franc will dropp toghether with the euro to other currencies like the UK pound did.
Swiss franc will be devalued by the national bank, there is no way that the Sfr. will become much stronger because the swiss economy is too smal compared to other countries.
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Old 25.05.2010, 10:04
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Re: How Does the Falling Euro Affect the CHF?

All things being equal, the trend would be for the CHF to appreciate. And this has happened - the CHF has appreciated vs Euro from 1.51 to as much as 1.40 this year. There have been a few reasons for the appreciation - Switzerland's economy is good shape, low Swiss deficit, the CHF is considered one of the safe haven currencies during a period of a flight to quality.

Because of the reasons you and Tom73 mention, the SNB has intervened sucessfully in the past to manage the rate of that appreciation but recently it couldn't fight the broad sell off on the Euro - the flows out were too high so the SNB couldn't resist the tide as the Euro slid vs all currencies. In circumstances like these there is a limit to how effective SNB intervention can be in stabilizing the exchange rate and the most important factor in managing the Euros depreciation vs the CHF will be the ECB's efforts to backstop the Euro.

Sterling also appreciated vs the Euro during, but much less so because of Britain's own problems. Both the Euro and GBP are seen as vulnerable currencies. However, further weakness in the Euro will almost certainly be a drag on the pound so at best, the two currencies are likely to move sideways against each other.

Along with the Swissie, the Norwegian and Swedish Kroner, which don't share Britain's deficit problems, have both risen quickly vs the Euro.
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Old 05.06.2010, 11:21
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Re: How Does the Falling Euro Affect the CHF?

EUR/CHF under 1.40 yesterday, important level breached so will likely slide further
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Old 05.06.2010, 12:05
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Re: How Does the Falling Euro Affect the CHF?

The following answers all questions about where the euro is going ...
Clarke and Dawes explain

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Old 05.06.2010, 18:32
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Re: How Does the Falling Euro Affect the CHF?

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The following answers all questions about where the euro is going ...[/youtubevid]
Nice one Irina
This video was actually from Australia
However the media often forget that if Eurozone countries owe each other money it's the net Eurozone debt position that counts.
And net debt isn't too bad.

Also, a lower Euro isn't necessarily a bad thing.
I say this because many EU countries are now reducing spending and they are doing it at a time when they need to be increasing it to keep their economies above water. Without devaluation the region could suffer a deep and prolonged recession.

Just watch the German and French exports take off after the Euro falls a bit more.
Why not let the CHF fall as well?, I love my swiss cheese but its very expensive
A lower Euro will also be good for tourism because Europe is traditionally an expensive destination so tourism right across Europe should benefit as well. And Ofcourse unemployment will fall and tax collection will improve as a result of the increased business activity, so its good all around.
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Old 05.06.2010, 19:49
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Re: How Does the Falling Euro Affect the CHF?

I *think* I'm relatively on topic here...

I have US dollars sitting in the bank, my wife has Euros sitting in the bank (it's a long story...) and we're moving to Switzerland in August or September. For those in the know, what would you do RIGHT now?

A) Leave everything as-is till the day before we relocate?

B) Immediately convert both dollars AND euros to CHF?

C) Convert only one of the holdings to CHF? If so, which one?

D) Some unthought-of option?

At some point, we will want all the money in Switzerland. The single goal is preservation of value... Not trying to make a profit or anything, just don't want to be left holding the loser.
Cheers,
nomadic
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Old 05.06.2010, 20:21
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Re: How Does the Falling Euro Affect the CHF?

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At some point, we will want all the money in Switzerland. The single goal is preservation of value... Not trying to make a profit or anything, just don't want to be left holding the loser.
Cheers,
nomadic
I don't have a crystal ball so your guess is as good as mine. Depends whether you're prepared to speculate or not and live with the consequences.
You could consider "averaging" ie you could FX your dollars and euros in tranches...say a portion every month. That way you won't end up a hero but you won't end up a fool either. Just a thought.
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Old 05.06.2010, 20:30
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Re: How Does the Falling Euro Affect the CHF?

i would convert $ to chf but hold onto euros a bit longer.. just few months ago chf was just a $, so i would def. take 1.16 now
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Old 05.06.2010, 20:35
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Re: How Does the Falling Euro Affect the CHF?

As i said in a similar thread, unless you are moving considerable i.e. at least a 5 figure sum, I wouldn't worry about it to much as it's only going to be a few hundred francs either way.
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Old 06.06.2010, 02:02
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Re: How Does the Falling Euro Affect the CHF?

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All things being equal, the trend would be for the CHF to appreciate. And this has happened - the CHF has appreciated vs Euro from 1.51 to as much as 1.40 this year. There have been a few reasons for the appreciation - Switzerland's economy is good shape, low Swiss deficit, the CHF is considered one of the safe haven currencies during a period of a flight to quality.

Because of the reasons you and Tom73 mention, the SNB has intervened sucessfully in the past to manage the rate of that appreciation but recently it couldn't fight the broad sell off on the Euro - the flows out were too high so the SNB couldn't resist the tide as the Euro slid vs all currencies. In circumstances like these there is a limit to how effective SNB intervention can be in stabilizing the exchange rate and the most important factor in managing the Euros depreciation vs the CHF will be the ECB's efforts to backstop the Euro.

Sterling also appreciated vs the Euro during, but much less so because of Britain's own problems. Both the Euro and GBP are seen as vulnerable currencies. However, further weakness in the Euro will almost certainly be a drag on the pound so at best, the two currencies are likely to move sideways against each other.

Along with the Swissie, the Norwegian and Swedish Kroner, which don't share Britain's deficit problems, have both risen quickly vs the Euro.

Are you for real?
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Old 06.06.2010, 10:32
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Re: How Does the Falling Euro Affect the CHF?

I had long discussions on this with bankers recently before a friend converted proceeds from a UK house sale.

1. The consensus seems to be that for long- and medium-term currency gains one should look to Singapore dollars and some other Asian currencies.

2. As for the Swiss franc, the SNB's market activity has trumped other exchange-rate influences: http://www.google.co.uk/search?q=swi...k+buying+euros

While the Swiss franc was thought linked to the fate of the euro, Swiss confederation and cantonal solvency would make any prolonged SNB market intervention an expensive (and loss-making) operation. Think of the parallel between Gordon Brown's selling off of UK gold cheaply, and the SNB's similar divestment. (And, remembering Norman Lamont's £bn gift to George Soros on Black Wednesday, read the pot calling the kettle black: http://www.telegraph.co.uk/comment/p...saw-burst.html )

3. Unless you are a speculator or are changing a small portion of your total wealth, the best advice is to stage your currency conversion over time. So long as you are changing more than, say, £10,000 you are entitled to ask your bank to quote you a market rate via its trading desk, which you are then entitled to accept or reject. (CHF-GBP trading can be volatile, a half-hour difference in timing can be expensive. http://finance.yahoo.com/q/bc?s=GBPCHF=X ) If you beat the experts it will only be by luck.
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Old 08.06.2010, 17:01
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Re: How Does the Falling Euro Affect the CHF?

LONDON -(Dow Jones)- The Swiss franc leapt to a new record high against the euro Tuesday, with no sign yet of intervention by the Swiss National Bank to push it back down. ...

rest at: http://www.dowjones.de/site/2010/06/...tion-seen.html

also in the WSJ: http://www.google.ch/search?q=Franc+...d+Against+Euro

The Swiss franc is also up against Sterling. Friend called to say they had saved tens of thousands of francs by converting last week.
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Old 08.06.2010, 17:48
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Re: How Does the Falling Euro Affect the CHF?

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LONDON -(Dow Jones)- The Swiss franc leapt to a new record high against the euro Tuesday, with no sign yet of intervention by the Swiss National Bank to push it back down. ...

rest at: http://www.dowjones.de/site/2010/06/...tion-seen.html

also in the WSJ: http://www.google.ch/search?q=Franc+...d+Against+Euro

The Swiss franc is also up against Sterling. Friend called to say they had saved tens of thousands of francs by converting last week.
CHF/euro now under 1.38.

Question for the Swiss National Bank is how many more value declining euros do they want to buy & put in the cellar?
Only paper losses but they are big numbers now?
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Old 08.06.2010, 21:33
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Re: How Does the Falling Euro Affect the CHF?

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LONDON -(Dow Jones)- The Swiss franc leapt to a new record high against the euro Tuesday, with no sign yet of intervention by the Swiss National Bank to push it back down. ...
The SNB intervened today but hadn't the clout. Like pi$$ing into the wind!
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Old 08.06.2010, 21:52
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Re: How Does the Falling Euro Affect the CHF?

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CHF/euro now under 1.38.

Question for the Swiss National Bank is how many more value declining euros do they want to buy & put in the cellar?
Only paper losses but they are big numbers now?
The FT adds this evening: "The pound fell on Tuesday after Fitch warned that the UK faced a “formidable” fiscal challenge in the coming months. However, it stopped short of reducing its triple A rating.

"The credit ratings agency said that following an unprecedented economic and financial shock, the UK would have to accelerate plans to reduce the budget deficit if it was to make the country’s public finances more sustainable in the medium term. ..."

http://www.ft.com/cms/s/0/9473978e-7...44feabdc0.html

Looking at the CHF-USD trend it seems to be more Sterling weakness than franc strength. As for the euro, its crisis has a long way yet to go. If it hoped to duplicate the old gold standard it has sadly failed, largely due to the fraud of some member state finance ministries, and the absence of political will and courage of others.

There are interesting permutations of currency systems that deny monetary policy to undisciplined governments. The Liberian dollar (and Panamanian dollar) were one. Currency boards (thinking of Estonia and Bulgaria, among other European countries) another. Now the priority seems to be saving Swiss and other European (and American) banks from having to write down Greek, etc., debt.

So many banks have assets on their books with fictitious valuations.
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Old 09.06.2010, 00:16
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Re: How Does the Falling Euro Affect the CHF?

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The FT adds this evening: "The pound fell on Tuesday after Fitch warned that the UK faced a “formidable” fiscal challenge in the coming months. However, it stopped short of reducing its triple A rating.

"The credit ratings agency said that following an unprecedented economic and financial shock, the UK would have to accelerate plans to reduce the budget deficit if it was to make the country’s public finances more sustainable in the medium term. ..."

http://www.ft.com/cms/s/0/9473978e-7...44feabdc0.html

Looking at the CHF-USD trend it seems to be more Sterling weakness than franc strength. As for the euro, its crisis has a long way yet to go. If it hoped to duplicate the old gold standard it has sadly failed, largely due to the fraud of some member state finance ministries, and the absence of political will and courage of others.

There are interesting permutations of currency systems that deny monetary policy to undisciplined governments. The Liberian dollar (and Panamanian dollar) were one. Currency boards (thinking of Estonia and Bulgaria, among other European countries) another. Now the priority seems to be saving Swiss and other European (and American) banks from having to write down Greek, etc., debt.

So many banks have assets on their books with fictitious valuations.
About "Looking at the CHF-USD trend it seems to be more Sterling weakness than franc strength."
You lost me there

My impressions are that people are fleeing the euro because they see it as a failing safe haven.
Consequently they are buying US$ which is not an ideal solution but seen to be a better bet than the euro.
Sterling is seen as an unknown quantity until the new Government confirm how the situation is & clearly state their next steps so Sterling is floating around the low point it hit some time ago.
The swiss economy is seen as "OK" so without intervention the CHF is staying where it is - I mean as the euro declines it becomes stronger versus the euro & as the US$ gets stronger so the CHF becomes weaker against the US$-

I foresee the euro continuing to weaken until all the finacial skeletons are out of the cupboard & until the weaker countries take real steps to fix their fiscal issues.
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Old 09.06.2010, 05:37
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Re: How Does the Falling Euro Affect the CHF?

The silent achiever has been the Looney ( CAD )....wish I had bought up about 12 months ago :-( Up about 15-20% against the CHF in the last 12 months.

AUD was also doing well until the latest Euro-Zone worries, but once again it proved, as a commodities-based currency, its first up against the wall when the bears move in.
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Old 09.06.2010, 11:42
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Re: How Does the Falling Euro Affect the CHF?

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The silent achiever has been the Looney ( CAD )....wish I had bought up about 12 months ago :-( Up about 15-20% against the CHF in the last 12 months.

AUD was also doing well until the latest Euro-Zone worries, but once again it proved, as a commodities-based currency, its first up against the wall when the bears move in.
Strange that the CAD is doing better than the AUD when both countries are big in commodities.
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Old 13.06.2010, 22:20
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Re: How Does the Falling Euro Affect the CHF?

The web of debt

http://www.nytimes.com/interactive/2010/05/02/weekinreview/02marsh.html
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