Franc Considered Overvalued Even Pegged to Euro

  September 09th, 2011 at 22:31, Vladimir Vyun

Swiss francThe Swiss franc fell today against most major currencies as Economy Minister Johann Schneider-Ammann said that the currency is “massively overvalued” even after the central bank pegged the franc to the euro. The franc advanced against the euro today.

Minister explained what he thinks the fair rate for the franc is:

There is a general understanding that purchasing-power parity is around 1.35 to 1.40 francs per euro. That’s pretty much accepted.

According to the index of the Organization for Economic Cooperation and Development, the Swiss currency is still 35 percent above the adequate price versus the euro.

The euro fell today on concerns about the debt crisis in the region, but the peg of the franc to the European currency hasn’t allowed the Swissie to profit from the resulting demand for a haven. Still, the Swiss currency rose versus the euro, nearing to the ceiling set by the Swiss National Bank.

USD/CHF closed today at 0.8835 after opening at 0.8754 and falling to 0.8706. CHF/JPY fell from 88.49 to 87.75. EUR/CHF closed at 1.2065, declining from the opening rate of 1.2151.

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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