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Old 28.03.2011, 21:09
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OECD - Franc overvalued by 39% against US$ and 32% v. Euro

Interesting article on the impact of the Swiss Franc being the only "safe haven" currency at present
http://www.bloomberg.com/news/2011-0...an-t-stop.html

Half way through they write "The currency [Swiss Franc] is still over-valued by 39 percent against its U.S. counterpart and is 32 percent too expensive versus the euro, according to an index developed by the Paris-based Organization for Economic Cooperation and Development that uses relative costs of goods and services."
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Old 28.03.2011, 22:19
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

Thanks for sharing. In the article, there is quite a range of possible values in the near future for the Swiss franc, we'll see. And the median of at least 30 analyst estimates in Bloomberg surveys is for the currency to weaken to 1.35 per euro by year- end, and to 97 centimes per dollar.

According to the article, the experts having a significantly different opinion are those forecasting an even stronger Swiss Franc. So far, the lowest level of euro has been forecasted and proven de facto to be 1.25 CHF. Maybe that the forecast is rather now that the highest level of euro is 1.35 CHF, at least for the near future (6 months - 1 year), and that the lowest level of euro vs Swiss franc is hard to estimate, even for the near future.
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Old 28.03.2011, 22:47
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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Interesting article on the impact of the Swiss Franc being the only "safe haven" currency at present
http://www.bloomberg.com/news/2011-0...an-t-stop.html

Half way through they write "The currency [Swiss Franc] is still over-valued by 39 percent against its U.S. counterpart and is 32 percent too expensive versus the euro, according to an index developed by the Paris-based Organization for Economic Cooperation and Development that uses relative costs of goods and services."
True of course, but not new wisdom at all. The high exchange rate is disastrous for the Swiss economy indeed. This is why the National Bank, with some success, tried to bring the rise in question under control. They succeeded 50% and failed 50%, as they simply could not buy up all available currency reserves !
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Old 28.03.2011, 23:05
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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Maybe that the forecast is rather now that the highest level of euro is 1.35 CHF, at least for the near future (6 months - 1 year), and that the lowest level of euro vs Swiss franc is hard to estimate, even for the near future.
Absolutely - that the Euro has been rather out of the news recently has more to do with unrest in the Middle East and disaster in Japan than with any improvement in the Euro-zone debt situation - which is still deteriorating. Coupled with the fact that at c. $1.40 to the Euro the Euro is looking somewhat over-valued again right now (thanks only to Germany) it really is difficult to call a bottom in the EUR/CHF relationship.
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Old 28.03.2011, 23:10
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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True of course, but not new wisdom at all.
What is new is the extent - a recent record low USD/CHF

Firstly Franc/Euro over the past 12 months:



And here Franc/USD over the past 12 months:



The five year view is even more dramatic



and



I think you'll agree you don't need to know the first things about finance - just basic arithmetic - to see that this is much more of a story now than ever before.
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Old 28.03.2011, 23:19
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

Reality is that the dollar has been going down against the CHF since exchange rates were floated.

When I first came here in '82, it was 2.3, when I moved here in '86, it was 1.9, now it's half that. In another 20 years, it'll be worth 5 centesimi.

Tom
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Old 28.03.2011, 23:21
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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Reality is that the dollar has been going down against the CHF since exchange rates were floated.

When I first came here in '82, it was 2.3, when I moved here in '86, it was 1.9, now it's half that. In another 20 years, it'll be worth 5 centesimi.

Tom
Quite - more like 20 months the way the Fed are going!
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Old 28.03.2011, 23:30
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

Good time to change money in GBP or USD?

You stole my link
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Old 29.03.2011, 00:20
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

Quite unintentionally I assure you.
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Old 29.03.2011, 00:53
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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True of course, but not new wisdom at all. The high exchange rate is disastrous for the Swiss economy indeed. This is why the National Bank, with some success, tried to bring the rise in question under control. They succeeded 50% and failed 50%, as they simply could not buy up all available currency reserves !
i haven't seen anyone creadible claim that the intervention wasn't a failure.

quote:

Investors have little concern that the SNB will seek to buy and sell currencies in an effort to weaken the franc after the central bank failed at such attempts from March 2009 to June 2010. The intervention contributed to a $21 billion loss for the SNB last year, according to the central bank.

While Oxford-educated Hildebrand, 47, who has been head of the central bank since January 2010, and the SNB tried to weaken the franc on their own, the G-7 jointly sold yen on March 18 as that currency’s strength threatened Japan’s recovery from the magnitude 9 earthquake. The yen has fallen 6.8 percent to 81.81 per dollar from the postwar high of 76.25 touched on March 17.

[/QUOTE]
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Old 04.04.2011, 22:53
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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Interesting article on the impact of the Swiss Franc being the only "safe haven" currency at present
http://www.bloomberg.com/news/2011-0...an-t-stop.html

Half way through they write "The currency [Swiss Franc] is still over-valued by 39 percent against its U.S. counterpart and is 32 percent too expensive versus the euro, according to an index developed by the Paris-based Organization for Economic Cooperation and Development that uses relative costs of goods and services."
Paris-based? & they think the CHF is expensive versus the euro; well they would wouldn't they!
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Old 05.04.2011, 00:07
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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i haven't seen anyone creadible claim that the intervention wasn't a failure.

quote:

Investors have little concern that the SNB will seek to buy and sell currencies in an effort to weaken the franc after the central bank failed at such attempts from March 2009 to June 2010. The intervention contributed to a $21 billion loss for the SNB last year, according to the central bank.

While Oxford-educated Hildebrand, 47, who has been head of the central bank since January 2010, and the SNB tried to weaken the franc on their own, the G-7 jointly sold yen on March 18 as that currency’s strength threatened Japan’s recovery from the magnitude 9 earthquake. The yen has fallen 6.8 percent to 81.81 per dollar from the postwar high of 76.25 touched on March 17.
[/QUOTE]

The SNB not only tried but DID reduce the rise of the CHF to quite some extent, but of course could not fully stop it, as the speculators fled into the CHF. The speculators of course had their financial interests in their mind and not the Swiss economy. Certain so-called "experts" say that there is no problem resulting from the completely unrealistic exchange-rate, but those folks do not see that Swiss exporters have to sell at minimum profits, that cargo-agents have to cut down their handling-rates (on which they depend) by 50% and that hotel-owners have to sell at bargain-rates just to stay in business.

Japan is not Switzerland ...................................
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Old 05.04.2011, 00:18
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

>The SNB not only tried but DID reduce the rise of the CHF to quite some extent

not really. it just delayed it at a massive cost. there's a reason that they gave up.

it would have been cheaper to hand the money directly to the swiss people.

Quote:
HILDEBRAND, MAY 11
"We will not allow any excessive appreciation that might generate deflation risks".
a crippling loss of a few billion later and he gives up his strategy:
Quote:
“The deflationary risk in Switzerland has largely disappeared.”


what a numpty.
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Old 05.04.2011, 00:45
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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>The SNB not only tried but DID reduce the rise of the CHF to quite some extent

not really. it just delayed it at a massive cost. there's a reason that they gave up.

it would have been cheaper to hand the money directly to the swiss people.

a crippling loss of a few billion later and he gives up his strategy:




what a numpty.
No, it did not just delay it, it reduced the rise and this was important. To give money to the people ? Why ? What for ? Such a thing would not have helped the economy.

Yes, they at a certain time stopped the interventions. A) because it had become too expensive and B) because Switzerland at a certain time had purchased so many Euros that Switzerland no practically rules that currency ! The problem for the SNB ? To sell the stuff is not on, as a big selling would send the Euro down to 20 CH-cents ! The good thing for the SNB ? Sure, when the Euro gets up again as it will, the SNB can then slowly sell the stuff with a tremendous profit
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Old 05.04.2011, 01:53
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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No, it did not just delay it, it reduced the rise and this was important
oh really? so what would the FX rate be today without the SNB free money give-away?
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Old 17.04.2011, 21:03
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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Quite - more like 20 months the way the Fed are going!
It will probably recover once the present administration is replaced.
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Old 17.04.2011, 21:46
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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It will probably recover once the present administration is replaced.
Really? Have you ever compared the graphs of USD / CHF exchange rates under Baby Bush and Obama? What's more, Obama inherited the biggest deficit of all times and an incredible lot of of sinkholes that still keep ruining the economy and the financial system. I cannot say I like what he and his administration do, but recovering from Dubbya & Co. will take more than just a few years.
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Old 17.04.2011, 22:16
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

http://youtu.be/E5agWxzWTsc

Strenght of SF causes price of Bundnerfleish to skyrocket worldwide. Swiss politicians very concerned.
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Old 17.04.2011, 23:55
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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No, it did not just delay it, it reduced the rise and this was important. To give money to the people ? Why ? What for ? Such a thing would not have helped the economy.

Yes, they at a certain time stopped the interventions. A) because it had become too expensive and B) because Switzerland at a certain time had purchased so many Euros that Switzerland no practically rules that currency ! The problem for the SNB ? To sell the stuff is not on, as a big selling would send the Euro down to 20 CH-cents ! The good thing for the SNB ? Sure, when the Euro gets up again as it will, the SNB can then slowly sell the stuff with a tremendous profit

No SNB did not reduce the rise; it just delayed it.

Can you quote a single reputable authority that states the SNB did succeed to reduce the rise?

About "Sure, when the Euro gets up again as it will"

Can you quote a single reputable authority that states the euro will rise vs the CHF? With Ireland, Greece, Portugal & probably Spain & Italy also in the frame the only direction for the euro is down; hopefully not down & out.
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Old 18.04.2011, 06:11
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Re: OECD - Franc overvalued by 39% against US$ and 32% v. Euro

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No, it did not just delay it, it reduced the rise and this was important.
Actually no, but it did give more money to the traders, banks and hedge funds who anticipated the action - and we certainly dont want to make them unhappy. Intervening in the markets by central banks affects the short end of the curve hence it justs delays what would have happened earlier. But at a much bigger expense of course.

Im still a buyer in SFr, in exchange for the Oz though in my case.
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