Speculations Regarding SNB Affect Franc
The Swiss franc advance has been a subject of great concern among central bankers in the tiny European nation as exporters are being affected by its high prices, raising speculations that the SNB is selling the currency to prevent its advances.
The Swiss franc posted a sharp and abrupt decline versus most of the 16 main traded currencies this Tuesday, providing support for speculators’ thesis that the Swiss National Bank is selling the currency to influence artificially on the franc’s charts, considered too high and harmful for the Swiss economy, mainly for its exporters, since a higher franc decreases Swiss products’ competitiveness.
EUR/CHF traded at 1.4640 as of 03:00 GMT from a previous intraday rate of 1.4625.
If you have any questions, comments or opinions regarding the Swiss Franc, feel free to post them using the commentary form below.
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Earlier News About the Swiss Franc:
- Swiss Franc Tumbles From Record High (2010-01-29)
- Swiss Franc Tumbles on Intervention Fears (2010-01-20)
- Swiss Franc Climbs Despite Intervention Warning (2010-01-18)
- Swiss Franc May Decline On SNB Interventions (2010-01-12)
- Swiss Franc Retreats After Central Bank Statement (2010-01-11)
2 Comments
How does higher franc decreases Swiss products’ competitiveness?
That’s simple. Producers in Switzerland pay salaries, taxes and for the raw materials in francs, but when they export their products they receive payment in other currencies (e.g. euro). So, when EUR/CHF falls down (franc appreciates) they have to either raise the prices (which is bad for competitiveness) or lower their their expenses in Switzerland somehow (which is not always possible).