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by Ashraf Laidi
Posted: Feb 22, 2010 5:00
Comments: 903
Posted: Feb 22, 2010 5:00
Comments: 903
Forum Topic:
CHF
Discuss CHF
I like the part that says" buying Euro, all day, every day"........
The SNB publicly opposes excessive strength in the Swiss franc, but never comments on day-to-day speculation that it has been supporting the euro against the franc. Still, following on from last year's series of aggressive interventions to weaken the franc, traders say that the central bank has been actively buying euros against the franc all day every day for months, seeking to prevent a rapid fall.
Earlier this week, the cost of those efforts became clear when it emerged that the central bank's foreign-currency reserves had soared by CHF78.8 billion ($68 billion) in May alone, taking the total to CHF232 billion.
To put that in context, that monthly accumulation represents around 15% of the entire Swiss gross domestic product. The amount is "of the same magnitude that China was seeing during the height of its campaign last year to stop the yuan breaking out of its range," said Derrick at the Bank of New York Mellon. The surge is bigger than any accumulation by Russia, while Japan's biggest-ever reserve jump was only slightly bigger--a $74 billion rise in April 2008.
To be sure, Switzerland's reserves are dwarfed by China's $2.4 trillion total--the biggest in the world. But they are now bigger than most in Europe; only oil-rich Norway and Russia have a larger hoard. As a proportion of GDP, Swiss reserves are now around the same size as China's, and are twice as large as those in Japan, according to Brendan Brown, an economist at Mitsubishi UFJ Securities International PLC.
The pace of accumulation is key. Analysts agree that without this euro-buying splurge, the 16-country currency would almost certainly now be a good deal weaker against the dollar, where it currently trades close to a four-year low, and against the yen, where it is near to its recent eight-and-a-half-year low.
b.
With this disappointing CPI, SNB could interpret it as sign that deflation risks are returning.
So fx interventions are likely to continue for sometimes and SNB have no issue of its currency reserve
But they are being faded!
after Fitch reminded UK about deficit and credit rating, do You think it would be a good idea to short GBP/CHF , besides GBP/USD ?
Latest news from Switzerland were not bright, (CPI -0.1%. , Retail Sales 1.3%, GDP 0.4%), and how much do You think they would impact CHF /
Thank You
p.s. Latest batch of interviews were very insightful
b.