Sell Swiss Franc NOW

[Anonymous]

http://www.tradingeconomics.com/switzer ... erest-rate

Swiss National Bank Cuts Rates
Published: 8/3/2011 10:35:24 AM    By: TradingEconomics.com, SNB
The Swiss National Bank cut its interest rate target band from 0.00–0.75% to 0.00– 0.25% on August 3, in a surprise move to stem the rapid rise of the Swiss franc.

SNB Press Release

 The Swiss National Bank (SNB) considers the Swiss franc to be massively overvalued at present. This current strength of the Swiss franc is threatening the development of the economy and increasing the downside risks to price stability in Switzerland. The SNB will not tolerate a continual tightening of monetary conditions and is therefore taking measures against the strong Swiss franc.

 Effective immediately, the SNB is aiming for a three-month Libor as close to zero as possible, narrowing the target range for the three-month Libor from 0.00–0.75% to 0.00– 0.25%. At the same time, it will very significantly increase the supply of liquidity to the Swiss franc money market over the next few days. It intends to expand banks' sight deposits at the SNB from currently around CHF 30 billion to CHF 80 billion. Consequently, with immediate effect, the SNB will no longer renew repos and SNB Bills that fall due and will repurchase outstanding SNB Bills, until the desired level of sight deposits has been reached.

 Since the SNB's last quarterly monetary policy assessment, the global economic outlook has worsened. At the same time the appreciation of the Swiss franc has accelerated sharply during the last few weeks. Consequently, the outlook for the Swiss economy has deteriorated substantially.

 The SNB is keeping a close watch on developments on the foreign exchange market and will take further measures against the strength of the Swiss franc if necessary.

What numskulls would invest in the Swiss franc. They have 0% interest rates, they believe it is overvalued, they are flooding the market with swiss franc. I don't know of the rumor that swiss francs are backed in part by gold, I have no idea of this, I am sure if you took francs to the bank they would not exchange any part of it in gold. I live in Australia, Our currency is doing quite well on the international market and interest rate is 5.5%, the online saver accounts give you 6.5% and some of them offer between $50 and $100 bonus if you signup and start a Automatic savings plan for 3 months. How stupid can someone be to invest in the swiss franc, it offers no return and it is fiat. I can understand investing in gold, silver, gold mining companies etc are risky but I think are better than the swiss franc.

I know most people don't have enough money to invest, I am just saying that there is a upsize limit of how much a fiat currency can be worth and no downside limit on how low value it can go. It is like shorting the stock market in reverse in some sense.

I suspect this devaluing of the swiss co-insides with the announcement of the downgrading of US debt to AA+ status, the aussie dollar also took a tumble, lost 5% in afew days after a announcement they would not lift rates, but keep steady. AUD has had flat rates for some time now, each month when they have announced they are holding steady, nothing happened, but this time the AUD was sold of with the above reason cited.

I was not sure if downgrading of US government debt would effect the US dollar chart negatively, with less than AAA+ credit rating, in theory it should restrict government borrowing and spending somewhat leading to a shortage of US dollars in the market. Most of the big holders of US hold it as government bonds, so even if they sold their bonds, cash would have to be raised causing the US dollar to rally.

But seeing that AUD and Swiss seem to be reacting pro defensively to a devaluation of the US dollar, it appears they knew beforehand afew days before the market announcement of downgrade of US debt to get themselves ready beforehand.

I am unsure if the dollar will go up or down, it is always difficult to tell.

[Ognir]

What are you on about, as I live and work in Switzerland I can tell you to have the Euro come down from 1.43 to 1.07x in a few short months has decimated the small businesses, including my own.

What do you suggest we hold besides Gold and Silver? In Swisses Gold is still 200.- below it's all time highs

[Anonymous]

Ognir, that is my point, the swiss franc has rallied so much that the government is taking steps to increase the supply of swiss francs onto the market, I think it could be downhill from here for the swiss franc, the government looks commited to bringing the value down with their 3 prong tactic, ie lower interest rates, increase liquidity of francs to the market and re/purchasing of bills.

I am saying you will want to move money out of the swiss franc, to where I don't know, but a different fiat probably, I can't see any reason now why swiss francs look attractive. I can't give you a good answer which currency, but perhaps overseas mining stocks or currencies like Indian Rupee that have not appreciated much and offer 10%+ interest rate, perhaps some of their government bonds, that would be my guess or maybe even buy the euro??? that might be the easiest solution, temporary.

You run a computer business, wouldn't retail prices become cheaper with computer components and help with sales or is the issue customers involved in exports having a hard time and can't afford your services?

[mchawe]

All the central banks including the Swiss one will target (euphemism for "Manipulate") the SF now in order to make the US Dollar look good in the light of the downgrade. The Fed is currently pretending it is not going to do another QE. Stopping QE is deflationary and short term dollar positive.
So you have a potentially short term strong dollar and an over bought Swiss Frank. Timing is difficult due to the strong uptrend. Picking tops is usually a losers game. Having said that, I think you are most probably right bluejelly and the time is now.

[Anonymous]

Looks like I was right on my call  

[Anonymous]

What do you suggest we hold besides Gold and Silver? In Swisses Gold is still 200.- below it's all time highs

It's up $200+ in a week past is all time high in CHF, I guess there is nothing performing better than GOLD ATM. I have been watching gold since 2004, every few years this happen, Gold just keeps running up, but it has come back down before, everytime we think it is different and we get proven wrong, caution here but still I think CHF is still overvalued.

[Anonymous]

The CHF is now trading at 1.13 USD to CHF, classic pump & dump if I ever saw it.