DJ MARKET TALK: Status Quo Looking Shaky for SNB's Franc Policy
21-Nov-2012
9:53 EST - While the Swiss National Bank is holding firm on its 1.20 floor for the euro against the Swiss franc, Neil Mellor at BNYMellon notes that a deterioration in the Swiss economy is putting pressure on authorities to do more. GDP is barely expanding, exports have contracted, inflation is "stumbling along" just above deflation, and there's a risk that the euro zone will destabilize again, weakening European demand for Swiss goods, and possibly sending a flood of capital into the safety of the Swiss franc. Raising the EUR/CHF floor doesn't seem to be an option, given the 300% increase in Switzerland's monetary base and concern about credit growth and a housing bubble, Mellor says. That may mean more aggressive policies are coming, such as capital controls, he adds. ([email protected])
21-Nov-2012
9:53 EST - While the Swiss National Bank is holding firm on its 1.20 floor for the euro against the Swiss franc, Neil Mellor at BNYMellon notes that a deterioration in the Swiss economy is putting pressure on authorities to do more. GDP is barely expanding, exports have contracted, inflation is "stumbling along" just above deflation, and there's a risk that the euro zone will destabilize again, weakening European demand for Swiss goods, and possibly sending a flood of capital into the safety of the Swiss franc. Raising the EUR/CHF floor doesn't seem to be an option, given the 300% increase in Switzerland's monetary base and concern about credit growth and a housing bubble, Mellor says. That may mean more aggressive policies are coming, such as capital controls, he adds. ([email protected])