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  #601  
Old 01.09.2011, 10:20
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Re: Swiss Franc Climbs to Record High

euro looking sick again today vs CHF

I wonder how much the vaule of Swiss exports were supported by this Swiss firm who were supported by the UK to sell fuel to the Libyan rebels?
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  #602  
Old 01.09.2011, 11:00
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Re: Swiss Franc Climbs to Record High

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One thing that strikes me that has not been brought up yet is why Swiss export companies should still have to pay vast amounts of CHFs on import VAT when they re-export those goods again anyway? Certain Swiss exporters only generate foreign income and they're being forced to transfer more foreign funds than ever presently to create Swiss Francs which they pay interest free to the Swiss Government only to reclaim it all back three months later anyway. WTF? As no one in Bern is about to run out of cash, why not waive this ridiculous VAT process for companies with say more than 50% foreign revenues? You read it here first.
does switzerland not have inward processing relief?

http://customs.hmrc.gov.uk/channelsP...HMCE_CL_000229
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  #603  
Old 01.09.2011, 13:58
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Re: Swiss Franc Climbs to Record High

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The direction of the franc reversed today because the SNB had stepped back from the swap market over recent days and the Economics Minister said the government has no exchange rate target in sight. All he talked about was measures to counter unemployment and boost tourism ie measures to counter the consequences of a strong franc rather than measures to prevent a strong franc.
About "SNB had stepped back from the swap market over recent days". Not sure I fully understand the swap market but from what I know I assume
firstly; the SNB must be running up a sizeable bill to pay for the forward points?
secondly; I assume it is not easy to find suitable partners for such swaps?

So I can understand if they step back.
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  #604  
Old 01.09.2011, 23:26
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Re: Swiss Franc Climbs to Record High

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I don't disagree with any of this. The problem is that outside of Switzerland, capital markets listen when the Economics minister says Switzerland will have to live with a strong franc for a long time. Measures designed to deal with the consequences, coupled with a halt in intervention are taken as strong signals that the Government's aim is to slow the rally in the franc rather than reverse it.
I simply say that the SNB has to keep the €-CHF rate at above 1.10 and the rate of now according to the UBS which is 1 € = CHF 1.13

Beside his being a loser, what Mr Schneider-Ammann basically meant is that a return to the € being CHF 1.30 is impossible. His positive will to mellow the change from 1.30 to 1.10 can be appreciated, but it will not, as his "measures" are non-starters and will all fail. The Swiss voters will NOT listen to "capital markets" when voting for the two chambers of parliament, and the new chambers of parliament will not listen to the "capital markets" either when re-electing/electing/non-electing the federal government.

Over again to Mrs Widmer-Schlumpf. The shrewd tactician since her election has silently and calmly moved from the far right to just right of centre, and I expect her to have become a Centrist at Christmas time.

I said that I expect "his" seat to be taken by the SVP, but may be wrong in that as the seat may well go to either the Greens or to the Green Liberals
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  #605  
Old 01.09.2011, 23:35
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Re: Swiss Franc Climbs to Record High

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Wolli's right (of course). This is election year and although not one party has actually said anything specific which the SNB doesn't already know, they're leaving their political commentary very restrained as no one seems to have anything clever to say.

One thing that strikes me that has not been brought up yet is why Swiss export companies should still have to pay vast amounts of CHFs on import VAT when they re-export those goods again anyway? Certain Swiss exporters only generate foreign income and they're being forced to transfer more foreign funds than ever presently to create Swiss Francs which they pay interest free to the Swiss Government only to reclaim it all back three months later anyway. WTF? As no one in Bern is about to run out of cash, why not waive this ridiculous VAT process for companies with say more than 50% foreign revenues? You read it here first.
When you IMport goods, you pay VAT, but when you export the same goods, you get the VAT back. And as in the process A) higher value products are added here and B) the bills to the customers are higher then the bills the companies had to pay, most companies involved make a profit. Add to this that many companies in other countries are CH-owned and so add to the "invisible trade-balance factors" . Really bad, as Messrs Cédric Wermuth and Christian Levrat of the SP point out, is the fact that 10'000s of jobs go lost, which is bad for the employees, but in the end not so tragic for the big companies. But it IS very bad for smaller companies who do NOT have an international network to rely on.
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  #606  
Old 02.09.2011, 11:16
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Re: Swiss Franc Climbs to Record High

Well here we have a roller-coaster again... does anybody know about some big decisions to be taken on swiss side in following days? Because to me it seems that demand for franc is driven by that, and I need to do some minor transactions to EU zone. Wolli, You are my hope
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  #607  
Old 02.09.2011, 11:19
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Re: Swiss Franc Climbs to Record High

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I simply say that the SNB has to keep the €-CHF rate at above 1.10 and the rate of now according to the UBS which is 1 € = CHF 1.13

Beside his being a loser, what Mr Schneider-Ammann basically meant is that a return to the € being CHF 1.30 is impossible. His positive will to mellow the change from 1.30 to 1.10 can be appreciated, but it will not, as his "measures" are non-starters and will all fail. The Swiss voters will NOT listen to "capital markets" when voting for the two chambers of parliament, and the new chambers of parliament will not listen to the "capital markets" either when re-electing/electing/non-electing the federal government.

Over again to Mrs Widmer-Schlumpf. The shrewd tactician since her election has silently and calmly moved from the far right to just right of centre, and I expect her to have become a Centrist at Christmas time.

I said that I expect "his" seat to be taken by the SVP, but may be wrong in that as the seat may well go to either the Greens or to the Green Liberals

Rate is now 1.11... Let us see who does what

About "The Swiss voters will NOT listen to "capital markets" when voting..."
I agree but this "ostrich" approach of ignoring reality may help some politicians to be voted in versus others but will not fix the problem - and will not help to get the correct people in place to fix the problem. Assuming the "correct" people do exist...
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  #608  
Old 02.09.2011, 11:34
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Re: Swiss Franc Climbs to Record High

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Well here we have a roller-coaster again... does anybody know about some big decisions to be taken on swiss side in following days? Because to me it seems that demand for franc is driven by that, and I need to do some minor transactions to EU zone. Wolli, You are my hope
Honestly speaking, i think the global markets are driven more by the fear factor rather than logical thinking at the moment, the rise of the CHF is due to the US / EU failing to provide solutions to their debt crisis, therefore people are thinking that CHF is the way to go....it won't be long till they realize it was a very bad bet as the Swiss economy is mostly depending on exports + tourism + providing global services and the local market is going to suffer from decrease of sales due to the very competitive price + exchange rate on the borders.

I said it before and will say it again, SNB decision to inject cash into the market was a very bad decision and no one will be able to do anything from the Swiss side to stop the problem, any additional injection in the market will cause rates to lower on the short term, once the demand is higher than the supply as we're seeing now, rates will go up again, more injection will cause inflation on the long run and if the EU / US adjusted their debts at anytime, CHF will drop down like crazy, even more than before.


In short, the main problem is in the EU / US not CH, once they find a solution the gets back the confidence of the investors, all will be back to normal, failing that means CH will have a peak momentum and then fall after dramatically if EU/US don't sort the crap.

P.S: the only thing i might think of is in the hands of the Swiss businesses, they have to lower their services / products rates to become a competitive market and leverage the CHF within CH, therefore avoiding future crash and inflation, though due to the fact of high costs of living and high salaries, i don't see this happening without laying off as much as they can from the local workforce and outsourcing all what they can outsource
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  #609  
Old 02.09.2011, 15:34
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Re: Swiss Franc Climbs to Record High

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Honestly speaking, i think the global markets are driven more by the fear factor rather than logical thinking at the moment, the rise of the CHF is due to the US / EU failing to provide solutions to their debt crisis,
In fact, the debt situation is so much worrisome, that on the last debt sale of the swiss confederation there happened something for the first time in the history of the country... there was so much demand that interest rates were negative, in other words, investors pay the swiss confederation for its debt instead of the swiss confederation paying interests for getting indebted.

The exchange rate is getting back close to 1.10 after getting close to 1.20. I will end up getting a heart-attack
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  #610  
Old 02.09.2011, 15:36
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Re: Swiss Franc Climbs to Record High

One factor keeping the franc high is that despite the people who think the strong franc is harming Switzerland the actual economy figures are quite good. Announced today;
"Despite rising concerns that a strengthening franc will choke off growth in the quarters ahead, Switzerland's economy expanded 2.3% in the second quarter."

Compare UK with 0.2% rise & USA with 1% in the same period
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  #611  
Old 02.09.2011, 15:44
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Re: Swiss Franc Climbs to Record High

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I assume it is not easy to find suitable partners for such swaps?
Hi,

I knew a swaps trader at Goldman Sachs, they will quote a price on pretty much anything anyone could ever want.
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  #612  
Old 02.09.2011, 15:50
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Re: Swiss Franc Climbs to Record High

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on the last debt sale of the swiss confederation there happened something for the first time in the history of the country... there was so much demand that interest rates were negative, in other words, investors pay the swiss confederation for its debt instead of the swiss confederation paying interests for getting indebted.
The flows into Swiss franc don't care about return. They're driven by capital preservation. Nothing the Swiss government has said or done to date will prove a deterrent to them. As Mowich says, fear is what's driving the franc. People aren't running to the franc because it's good value. People are running away from the Euro and the dollar and the franc and the yen are the only currency destinations.
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  #613  
Old 02.09.2011, 16:28
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Re: Swiss Franc Climbs to Record High

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The flows into Swiss franc don't care about return. They're driven by capital preservation. Nothing the Swiss government has said or done to date will prove a deterrent to them. As Mowich says, fear is what's driving the franc. People aren't running to the franc because it's good value. People are running away from the Euro and the dollar and the franc and the yen are the only currency destinations.
Makes sense, but... franc jumped from almost parity to euro to 1.20, for some reason. Problems of US and EUR seem to me as long-term, so I guess something else must have effected this. And I see only Swiss side with printing or whatever they are doing. Now (maybe) for mentioned reasons we are coming close to 1.10. All I ask is if there can be some planned event on swiss side (big finance boys meeting or something) that could send another message that will make franc jump back to 1.20. I know it's not so straightforward, and there are many variables...
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  #614  
Old 02.09.2011, 16:30
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Re: Swiss Franc Climbs to Record High

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The flows into Swiss franc don't care about return. They're driven by capital preservation. Nothing the Swiss government has said or done to date will prove a deterrent to them. As Mowich says, fear is what's driving the franc. People aren't running to the franc because it's good value. People are running away from the Euro and the dollar and the franc and the yen are the only currency destinations.
SNB act is what drove it down, but this is one time measure, don't see it happening again.
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  #615  
Old 02.09.2011, 16:38
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Re: Swiss Franc Climbs to Record High

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SNB act is what drove it down, but this is one time measure, don't see it happening again.
Nope. It helped, but the risk on trade drove it down. Swiss money markets aren't big enough for injections of liquidity to work

Don't just look at the FX markets. To understand the moves look at other markets. Today equity markets tanked. Risk is off. Safe havens up.

Last edited by Nev; 02.09.2011 at 16:53.
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  #616  
Old 02.09.2011, 19:02
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Re: Swiss Franc Climbs to Record High

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Hi,

I knew a swaps trader at Goldman Sachs, they will quote a price on pretty much anything anyone could ever want.
OK, I thought with Swiss Francs moving into negative interest territory people might be nervous about quoting forward points when the CHF could decline a lot in value before "hand back" time.
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Old 02.09.2011, 19:05
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Re: Swiss Franc Climbs to Record High

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Nope. It helped, but the risk on trade drove it down. Swiss money markets aren't big enough for injections of liquidity to work

Don't just look at the FX markets. To understand the moves look at other markets. Today equity markets tanked. Risk is off. Safe havens up.
About "equity markets tanked" - reaction to the US numbers. Bit unusual I thought; it is usually sell on the rumour & buy on the news
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  #618  
Old 02.09.2011, 19:11
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Re: Swiss Franc Climbs to Record High

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In fact, the debt situation is so much worrisome, that on the last debt sale of the swiss confederation there happened something for the first time in the history of the country... there was so much demand that interest rates were negative, in other words, investors pay the swiss confederation for its debt instead of the swiss confederation paying interests for getting indebted.
In this day and age investors are not so concerned with getting a good return on their money, as a return OF their money.
The fear is that soon the Euro will lose a large portion of its value... or worse still that nations are expelled from the currency union and the Euro ends up becoming virtually worthless. The Euro as a currency is a POLITICAL expedient, not an economic one.
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Old 02.09.2011, 19:15
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Re: Swiss Franc Climbs to Record High

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OK, I thought with Swiss Francs moving into negative interest territory people might be nervous about quoting forward points when the CHF could decline a lot in value before "hand back" time.
The quote they give will be valid for 10 or 15 seconds, they will have other offers open on their screens during that time so can square the entire position instantly. They will take very little risk and make a profit of a fraction of a percent on the deal. If their spread is too big somebody else will get the trade, the swaps market is very efficient.
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Old 03.09.2011, 22:40
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Re: Swiss Franc Climbs to Record High

What's the latest on whether it will go into negative interest territory? Will this effect checking accounts as well as savings accounts?
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