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Old 11.08.2011, 10:49
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Re: Swiss Franc Climbs to Record High

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TL;DR
Must you quote the walls of text?
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  #462  
Old 11.08.2011, 11:27
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Re: Swiss Franc Climbs to Record High

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About "You may advise Mr Hildebrand about what to do"

Fine - Mr Hildebrand please do nothing.
If you choose to do something then the effect will be worse than doing nothing. Your choices are
  • Pump money into the economy which will generate inflation
  • print CHF to buy euros which will generate mammoth losses
  • Make interest rates negative
i think the one thing that he could do is impose some kind of negative rate/levy on foreign inflows.

or they can give up and just impose capital controls - but i'm not sure if this would be practically possible.

IMO, the measures they've taken so far are too inflationary and they should not go further down this route (printing etc.). that said, i expect that this is probably the route they will go down since idiots will demand that the SNB must do something even if that something will make things worse.

in the end, i expect the living standards of the swiss to fall considerably as a result of the actions the SNB.
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  #463  
Old 11.08.2011, 11:42
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Re: Swiss Franc Climbs to Record High

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i think the one thing that he could do is impose some kind of negative rate/levy on foreign inflows.

or they can give up and just impose capital controls - but i'm not sure if this would be practically possible.

IMO, the measures they've taken so far are too inflationary and they should not go further down this route (printing etc.). that said, i expect that this is probably the route they will go down since idiots will demand that the SNB must do something even if that something will make things worse.

in the end, i expect the living standards of the swiss to fall considerably as a result of the actions the SNB.
Completely agree especially with "in the end, i expect the living standards of the swiss to fall considerably as a result of the actions the SNB"

The value of the Swiss franc is mostly in the hands of eurozone politicians now which is a nightmare scenario.

Also
Gold is now over $1,800 which reflects $ weakness rather than strength of gold.
Rumours about France credit rating being downgraded do not help.

If they do impose negative interest rates on foreign capital then I do not think that will help much. They did it in the 70's but versus stag inflation in some countries it did not help.
I do not suppose today they would put in the rates of -10% to -15% that would be needed?

Plus it could be negative for UBS & other big Swiss banks.
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  #464  
Old 11.08.2011, 11:48
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Re: Swiss Franc Climbs to Record High

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  #465  
Old 11.08.2011, 11:54
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Re: Swiss Franc Climbs to Record High

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Completely agree especially with "in the end, i expect the living standards of the swiss to fall considerably as a result of the actions the SNB"

The value of the Swiss franc is mostly in the hands of eurozone politicians now which is a nightmare scenario.

Also
Gold is now over $1,800 which reflects $ weakness rather than strength of gold.
Rumours about France credit rating being downgraded do not help.

If they do impose negative interest rates on foreign capital then I do not think that will help much. They did it in the 70's but versus stag inflation in some countries it did not help.
I do not suppose today they would put in the rates of -10% to -15% that would be needed?

Plus it could be negative for UBS & other big Swiss banks.
last time they put it at 10% per quarter. i expect the would need to do at least that again this time - which i think would be enough to stop normal inflows, but not panic inflows.

in the end, i expect as last time they will give up and sacrifice price stability in favour of exchange rate targetting - i'm not sure if this will require a change in the mandate of the SNB or whether this can be justified by their existing charter.

jp morgan wrote a paper on this about a year ago. i'll see if i can dig it up.

EDIT: here it is: https://mm.jpmorgan.com/stp/t/c.do?i...pdf*h_-1vgm7fk
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  #466  
Old 11.08.2011, 15:48
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Re: Swiss Franc Climbs to Record High

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last time they put it at 10% per quarter. i expect the would need to do at least that again this time - which i think would be enough to stop normal inflows, but not panic inflows.

in the end, i expect as last time they will give up and sacrifice price stability in favour of exchange rate targetting - i'm not sure if this will require a change in the mandate of the SNB or whether this can be justified by their existing charter.

jp morgan wrote a paper on this about a year ago. i'll see if i can dig it up.

EDIT: here it is: https://mm.jpmorgan.com/stp/t/c.do?i...pdf*h_-1vgm7fk
JP Morgan do not seem to be too enthusiastic about negative interest rates as a solution.

Below is a good example of what many analysts are saying today.

Jane Foley at Rabobank said SNB policymakers must know that they were swimming against the tide. She said with Swiss interest rates close to zero, further rate cutting was unlikely to have much of an impact and FX intervention was likely to create a costly loss for the central bank.
"There is a strong risk that the eurozone debt crisis will intensify before conditions ease, suggesting there could be more painful gains in sight for the Swiss franc," said Ms Foley.
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  #467  
Old 11.08.2011, 16:17
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Re: Swiss Franc Climbs to Record High

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in the end, i expect as last time they will give up and sacrifice price stability in favour of exchange rate targetting - i'm not sure if this will require a change in the mandate of the SNB or whether this can be justified by their existing charter.
So what will happen then Phill?
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  #468  
Old 11.08.2011, 16:18
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Re: Swiss Franc Climbs to Record High

eur/chf 1.07 now, theres vol for you.
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  #469  
Old 11.08.2011, 16:42
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Re: Swiss Franc Climbs to Record High

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JP Morgan do not seem to be too enthusiastic about negative interest rates as a solution.

Below is a good example of what many analysts are saying today.

Jane Foley at Rabobank said SNB policymakers must know that they were swimming against the tide. She said with Swiss interest rates close to zero, further rate cutting was unlikely to have much of an impact and FX intervention was likely to create a costly loss for the central bank.
"There is a strong risk that the eurozone debt crisis will intensify before conditions ease, suggesting there could be more painful gains in sight for the Swiss franc," said Ms Foley.
Japanese Yen is already back where it was before their intervention. CHF falling today against USD/EUR/GBP though. I kinda want it strong though, but only because I am selfish.
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  #470  
Old 11.08.2011, 16:44
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Re: Swiss Franc Climbs to Record High

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eur/chf 1.07 now, theres vol for you.

Hurrah for the SNB!

Wonder how long they can keep it up

SMI has also turned around in the last hour from -1% to + 1%

I think everything today is fuelled on hot gossip & rumour; volumes are huge.
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Old 11.08.2011, 17:19
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Re: Swiss Franc Climbs to Record High

It's most likely not the SNB, but the cash is back in equities. Gold is also down.

I'm not really happy this has happened just today, I wanted to buy a car first ;-).

EUR/CHF is at 1.085 now.
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Old 11.08.2011, 17:24
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Re: Swiss Franc Climbs to Record High

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It's most likely not the SNB, but the cash is back in equities. Gold is also down.

I'm not really happy this has happened just today, I wanted to buy a car first ;-).

EUR/CHF is at 1.085 now.
Yes but probably the SNB will claim it as a victory - just 5 minutes before it all goes crashing down again.......
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  #473  
Old 11.08.2011, 17:26
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Re: Swiss Franc Climbs to Record High

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It's most likely not the SNB, but the cash is back in equities. Gold is also down.

I'm not really happy this has happened just today, I wanted to buy a car first ;-).

EUR/CHF is at 1.085 now.

The news is that SNB is threatening action and the threat is being respected, there is talk of pegging the swissie to the euro at 1.15 with potential negative lending rates...
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  #474  
Old 11.08.2011, 17:36
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Re: Swiss Franc Climbs to Record High

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The news is that SNB is threatening action and the threat is being respected, there is talk of pegging the swissie to the euro at 1.15 with potential negative lending rates...
1.15 is OK for me (the man who bought a bunch of euros for 1.22 some weeks ago....)
But surely not OK for those Swiss businesses whining about the high Franc?

p.s. As I said I believe the trading is all rumour driven now...............
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  #475  
Old 11.08.2011, 17:39
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Re: Swiss Franc Climbs to Record High

Bought some EUR at 1.08 at the bank today.
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Old 11.08.2011, 17:40
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Re: Swiss Franc Climbs to Record High

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1.15 is OK for me
This is some analyst's estimate and they do have a tendency to get it wrong...

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Bought some EUR at 1.08 at the bank today.
Nice profit for the bank then
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Old 11.08.2011, 17:45
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Re: Swiss Franc Climbs to Record High

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Hurrah for the SNB!

Wonder how long they can keep it up

SMI has also turned around in the last hour from -1% to + 1%

I think everything today is fuelled on hot gossip & rumour; volumes are huge.
SMI now up 4.4% on the day
I suppose people are already practising their drinking ready for the street parade
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  #478  
Old 11.08.2011, 17:47
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Re: Swiss Franc Climbs to Record High

So how much time do I have to transfer my entire CHF savings into a euro account before the rates return to normal? I usually have moral qualms about making easy money through financial shenanigans instead of hard actual work, but I realise this is mostly because I do not understand said shenanigans as they most often involve stocks, bonds, 3rd pillar investments etc. but a very favourable exchange rate that will not last I can comprehend. So?
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  #479  
Old 11.08.2011, 17:54
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Re: Swiss Franc Climbs to Record High

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So how much time do I have to transfer my entire CHF savings into a euro account before the rates return to normal? I usually have moral qualms about making easy money through financial shenanigans instead of hard actual work, but I realise this is mostly because I do not understand said shenanigans as they most often involve stocks, bonds, 3rd pillar investments etc. but a very favourable exchange rate that will not last I can comprehend. So?
Are you expecting someone from the tinternet to tell you when to change your money?
It's a bet / gamble at the end of the day whichever way you look at it, and if everyone knew what is going to happen tomorrow then we wouldn't see any movement.
Now if you believe the Swissie is too strong and you need the money in euro's go ahead and buy it, if you need swiss franks you need to ask yourself whether you could afford to convert back at a lower price?
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Old 11.08.2011, 18:00
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Re: Swiss Franc Climbs to Record High

As competence goes, advice from the "tinternet" wouldn't be worse than that of a highly paid financial "expert". Exception of course for people who trade in the "love" business.
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