18/01/2015
Swiss francs abandoned disrupt global financial markets trader bankrupt overnight
 Min Bao - January 17, 2015 9:30 pm
Swiss National Bank on the 15th canceled 1.2 francs to one euro to maintain the three-year bottom line, negative interest rates widened to -0.75%, the sudden move to global currency chaos and not only the euro fell again to $ 1.1543 per euro, the Swiss franc and strong rose nearly 3 percent, so the bulk of the Swiss watch industry exports crying incessantly, and even countries due to hedge less forex trader, forex traders have been England London Alpari Group, New Zealand, Global Brokers futures trader declared bankruptcy, the large US forex brokers The company FXCM in huge losses, hit the SNB credibility.
Switzerland on Thursday issued a surprise to the world's people, "Swiss tsunami", the international foreign exchange markets into a panic on Friday, the Swiss central bank has canceled three years to maintain 1.2 francs to one euro's bottom line in the case without warning, in order to reduce the cost to defend the Swiss franc, while the interest rate cuts announced two yards, so that negative interest rates widened to -0.75%, in order to stimulate the domestic economy, but it appears to be very good move allows the global financial market chaos and even the International Monetary Fund (IMF ), general manager of Lagarde complained: "not to notice me."
SNB abandoned rational action but criticized reckless "in the history of the worst."
This is the financial market refers to the "massacre" of the action, be interpreted as the Swiss central bank's policy of pre-emptive QE in Europe, that the European QE size may be larger than expected, then let the fear of too much hot money into Switzerland, the Swiss central bank would have to pay more the cost of defending against the Swiss franc remained at 1.2 € 1 for the bottom line, consider a heavy burden, the Swiss National Bank decided to abandon the bottom line, at the same time expanding their first negative interest rates, and create their own relaxed environment against domestic deflationary crisis.
Although seemingly quite legitimate reasons, but because the Swiss National Bank (SNB) last month also showed that the Swiss franc against the euro vowed cap is the cornerstone of the national monetary policy, on the 15th move suddenly, so that the public questioned its credibility. Independent analyst Dennis Gartman told foreign media access to attack, this action "is really a wise decision," led to many people worldwide suffer significant losses. He pointed out that the SNB will do cents no warning, and they have spent a lot of the Swiss franc, the size of thin air and create a central bank even enough. Even some analysts criticized this action is simply "the worst act"
The price to pay for all countries, including the US dollar and then rose to $ 1.1543 per euro, after hitting 1.1460, a record high since November 2003. The appreciation of the Swiss franc itself up nearly 3 percent, after earlier reached 0.8517 francs per euro in the highest level, Asian countries, the yen against the dollar 0.99%, up 0.56% of Pentacles, won rose 0.56 percent, up NT $ 0.45 %.
CHF safe-haven status shaken traders collapse, avoiding the debt capital city
In the past, the Swiss franc was stable, has been an important international currency hedge, and therefore through the Swiss financial market hedge transactions accounted for a considerable proportion of the site, so the Swiss franc suddenly abandoning the euro on the international financial markets is undoubtedly a depth charges, so that the major forex traders to hedge less, a serious lack of liquidity, foreign exchange dealers came yesterday Fun suspend Swiss offer even collapse, including Britain forex trader Alpari Group announced the closure of London, also sponsored and thus spread England football team, "West Ham." New Zealand Futures Commission Merchants Global Brokersu also lead to a loss because of the Swiss franc soared, reached less than a prescribed authority NZ $ 1 million ($ 782,500) minimum capital requirements, announced the end of the business. Large Forex broker FXCM US is in huge losses, FXCM thus causing even less appropriate capital adequacy ratio, are trying to find alternatives, in order to raise their capital adequacy ratio, but also to discuss related issues with the competent authorities.
In the bond market, but also because of the influx of hedge funds, resulting in debt yields fell, the 10-year bond index, fell 0.45 percent in Germany, the United Kingdom fell to 1.49 percent, the Swiss dropped more negative 0.031 percent, an unprecedented turn is negative, there has also abandoned the debt transfer effect of US debt, US 10-year bond yields fell 14 basis points to 1.71 percent, also hit an intraday low of 1.70% since May 2013 low.
Currency surged fear greatly hurt the Swiss economy
Important export industry in Switzerland, but also because the Swiss franc makes spiraling costs surge, all grievances, including Swatch Group, Swatch Group's Omega, Rolex (Rolex), Richemont's Cartier, Swiss exports accounting for more than 1/10 tourism foreign exchange earner, chocolate industries, all due to the appreciation of the Swiss franc and the emergence of fast price pressure, fear of the impact of the performance of the Swiss economy.
This action will not only lead to the SNB international question, and even the country also lambasted, Agence France-Presse reported on the 16th in Geneva, Switzerland, Chamber of Commerce (Swiss Business Federation) statement that "from an economic point of view, at the moment this move puzzling. " The Council also warned that Switzerland's economic lifeline stake exports and tourism industry will be hurt. Swiss newspaper "Times" (Le Temps) in an editorial accused the Swiss central bank "made infantilism", "Tribune de Genève" (Tribune de Geneve) refers to the Swiss National Bank, "is to wear down the Swiss economy."
Swiss franc against the euro limit was introduced in September 2011, aimed at combating deflation and relieve the pressure on Swiss exporters, has since become an important pillar of the Swiss central bank's monetary policy over the past three years, the Swiss franc due to the weak economy and the strong euro zone, At the moment though abandoning action to ward off the possibility of large-scale ECB QE policy, but can resist the loose action remains to be seen next in succession, but also pay the price hit Switzerland's international safe-haven status and prestige of the Swiss National Bank .
Larry Goodman Financial Stability Center in New York (Center for Financial Stability) president told the "Wall Street Journal" access time of the alleged SNB's decision reflects a lack of coordination among central banks worldwide, the need for coordination between the central bank, it also reflects how Fed policy affecting ECB policy, which can then affect the Swiss National Bank. But Jordan, president of the Swiss National Bank believes that the market for the Swiss franc against the dollar to give up the bottom line of overreacting, and reiterated that this is not a panic reaction, but decided to make deliberate.
