Storm eye has been opened The Swiss national bank
to enlarge recruit frighten the world
As investors areThe federal reserveWhen the (FED)Increases in interest ratesandThe GreekQuestions to get "burned", once"The Swiss francThe
earthquake"The Swiss national bankPushing again.theThe central bankSaid on Wednesday it will expand the applicable scope of negative interest rate of current deposit account, cause against the Swiss francThe euroIts biggest fall in more than a month.In analysts view, Switzerland's central bank may be just the head, once the Swiss franc, continue to strengthen the central bank is set to make a more radical response, including QE, resetThe exchange rateTarget, etc.
Switzerland's central bank announced on January 15, suddenly give up 1.20 against the Swiss franc against the euro exchange rate limit, and also the current deposit interest rates fell from 0.5% to 0.75%.Triggering the financial markets to a rare "giant".
Northern European Union bank (Nordea Markets) think, if the euro/Swiss franc fell below 1.00 level, the Swiss central bank's next move might include quantitative easing (QE) and/or reset the exchange rate target range.
The Swiss central bank released again
Switzerland's central bank on Wednesday (April 22) said it will expand applicable scope of negative interest rate of current deposit account.The decision made by this kind of account holding the attraction of the Swiss franc fell further, the Swiss franc against all 16 of its main rival currency fell 0.5% at least.
The SNB issued a statement on Wednesday said it will significantly reduce saving the bank the deposit account of negative interest rates at sight of speculative money into Swiss francs.After the news, the Swiss franc against the dollarThe dollarAnd the euro and other currencies all lower.
Switzerland's central bank said in a statement, will be part of the Swiss franc charge 0.75% of the deposit, in order to curb speculative funds into the Swiss franc.
Switzerland's central bank also said: "the central bank has been completed waiver review so as to reduce enterprise's current deposit account holder waiver coverage... now negative interest rates will also apply to enterprises in the central bank's deposit account at sight, these enterprises the main and the Swiss federal and pension funds are concerned."After critics refers to public institutions are not in charge of.
After the announcement, the Swiss franc against the dollar and the euro currency rapidly across the lower.Among them, the dollar/Swiss franc short-term from 0.9550 to 0.9653, the euro/Swiss franc is near from 1.0285 1.0366 level.
(The Swiss franc against the dollar figure 1 minute source: Zerohedge, FX168 financial network)
Late in New York on Wednesday, the dollar/Swiss franc soared 1%, at 0.9643.The euro/Swiss franc rose 0.8% to 1.0338, or the biggest since March 16.
The FrenchSociete generale(601166,Stocks!), Societe Generale, said: "the Swiss central bank tightened rules of sight deposits increased chances of institutions to impose negative interest rates, especially in the area of banking bureau of Greek debt risks environment. After the Swiss central bank tightened rules, can save a negative interest rate policy will empty your institution number. These saving bank can avoid business deposits negative interest rates take off tired, and the Swiss national debt of the 10-year Treasury yield (1-1.1%) as negative interest rates."
The agency said the Swiss central bank will tighten policy of pension funds or other agencies made considerable risk, most of the Swiss asset heavily overbought reality with the global capital are reluctant to buyThe euro zoneThe trend of the assets is still extreme (mostThe United StatesAttracted by the assets).
Citigroup (Citi), points out that the Swiss national bank's decision to some institutions will not save a negative interest rate policy, news pushed the euro/Swiss franc soared, many currencies against the Swiss franc hit by the negative interest rate policy to expand, precipitated by the central bank decided to Switzerland depositors try to avoid cost, or simply the franc converted into foreign currency.
The Swiss franc appreciation pressure
Driven by Greece out the concerns and the dollar correction, in the past month the Swiss franc has been on the rise, it also makes the dollar/Swiss franc under downward pressure.As a result, the euro/Swiss franc also almost reached near parity.Switzerland's central bank seems increasingly uneasy, chart suggests that the euro/Swiss franc fell below 1.03, the Swiss national bank has returned to intervene in currency markets.
(Image: northern European Union bank, FX168 financial network)
Although the Swiss national bank's balance sheet is a large scale, but the housing market risk is not as big as in 2012 years.Credit suisse,Expand and house price appreciation momentum seems to be slow.Because of this, at least the future currency intervention over a period of time will continue.
(Image: northern European Union bank, FX168 financial network)
The Swiss central bank worried that the currency impact
Sharp appreciation of the Swiss franc has negative effects on the Swiss economy, but also the effect is not "a flash in the pan" : Swiss manufacturing PMI is still lower than 48, and employment index fell to its lowest level since 2009, in addition, retail sales fell 2.7% year-on-year in February.
In addition, the inflation rate into negative territory again, the same is true of core inflation.The following figure shows that the Swiss model back into deflation.
(Image: FX168 business network)
It is obvious that the Swiss national bank for the current situation is not satisfactory.Switzerland's central bank governorJordan(Thomas Jordan) has already been pointed out that "Swiss future will face a difficult period," but he wants 1% of economic growth is still achievable.But if economic momentum has not improved, even 1% growth will continue to be a big challenge.
So in addition to the intervention, the Swiss national bank and what steps are available?
1. Cut interest rates on deposits
The Swiss national bank deposit rate is 0.75%, the central bank may cut interest rates further, to further make the Swiss franc.So far this year, the euro has risen more than 10%.
(Image: Zerohedge, FX168 financial network)
Switzerland's central bank governor Jordan had earlier said: "let the negative effect and help to weaken the franc, this is very important."
When asked about the size of Switzerland's central bank may cut the deposit rate, the international monetary fund (IMF), the Swiss delegation, said Kevin Fletcher's hard to say where effective lower limit is now.
Switzerland's central bank may also launched quantitative easing (QE).The IMF in March 23 report suggested that the Swiss national bank can offer special QE measures, limited by Swiss domestic asset pool.
The Swiss national bank board member Dewet Moser admitted that QE is one of the options for the Swiss national bank.
After the Swiss national bank to cancel the upper limit of the currency, the Swiss economy growth is slowing, consumer prices this year and next year are expected to decline.The IMF said in its annual economic evaluation report, the Swiss national bank to further loosening of monetary policy or will help to stop the Swiss economic slowdown, and reduce the risk of associated with very low inflation.
The IMF said, purchases may include foreign exchange assets, may also include some domestic assets (although more limited range), purchases can be in the development of adjustments if necessary.
To buy foreign assets will allow the Swiss central bank attempts to hold down the Swiss franc, in view of Switzerland in 2013, the ratio of debt to output is about 35%, may not have enough domestic bond for the Swiss national bank to achieve sufficient policy easing.
Switzerland's central bank management committee member progenitor brooke (Fritz Zurbruegg) in Zurich on March 26, said the speech, the Swiss franc remains substantially overvalued, if it is necessary to buy foreign currency at any time.
3. Reset the exchange rate targets
In addition, the Swiss national bank may set a target rate for the euro/Swiss franc, or is the exchange rate target range, for example, 1.10-1.15.
In fact, since the Swiss national bank after the abolition of the exchange rate, has been on the market there are rumours that the central bank will resume pegged to the euro.
In early February the Sunday Switzerland, Swiss newspaper quoted sources reported that Switzerland's central bank will maintain the euro/Swiss franc at 1.05-1.10 range.But the Swiss central bank spokesman did not comment on the reports.
The franc will continue
Even weeks fell, the Swiss franc remains the best performing major currency this year, because of its January rose after the central bank cancelled the upper limit of appreciation.Greek political instability,The European central bank (ECB)QE to push the euro, the investors of the Swiss franc.
Northern European Union bank wrote in a report: "by any measure, the Swiss franc is still the most overvalued a G10 currency currency. We also on Switzerland's central bank governor Jordan 'overall the Swiss franc remains heavily overvalued, should let the exchange rate depreciation' remarks."
Citigroup, referring to the Swiss central bank's latest move on Wednesday, if there is no other subsequent more Swiss franc bullish hedge of factors, including policy difference, the Greek debt deadlock, etc., the euro/Swiss franc may be difficult to continue the current rally.
Rick - Bank (Swissquote Bank SA) in Gland, Switzerland market strategy director Peter Rosenstreich said: "obviously the Swiss national Bank is to reduce the attractiveness of the Swiss franc, I don't think these measures can change the strength of the Swiss franc. Small drop unimportant compared to the depreciation of the euro, not to mention if a Greek default that worse."