Minimum Exchange Rate for CHF Discontinued | Currency Futures


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Minimum Exchange Rate for CHF Discontinued

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Market Wizard
Berlin, Europe
 
Trading Experience: Advanced
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Minimum Exchange Rate for CHF Discontinued

The Swiss National Bank does no longer try to maintain an artificial minimum exchange rate and abandoned its policy today. At the same time interest rates were lowered to -0.75%


First results:

Panic spread and the CHF temporarily rose by over 40% against the USD and EUR. It is now trading about 16% higher compared to yesterday's close.


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The EUR fell 1..6% against the USD to an exchange rate below USD 1.16. Now stabilized. Interesting enough, when the news hit the markets, the EUR was already sitting on the prior week's low and waiting for a breakout to the downside.


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The FDAX dropped over 3% and then stabilized.


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Once more this case confirms that national banks cannot eternally defend their currencies against the markets. Probably it has cost the Swiss National Bank millions to maintain the Swiss Franc in a narrow corridor. The opportunity to abandon the fixed exchange rate came, when the Euro had dropped significantly against the USD with the CHF following its path.


The current exchange rate sees the Swiss Franc back at an exchange rate where it was in April last year.


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