The Swiss franc will remain one of the most desirable currencies in Europe unless the old Deutschemark is resurrected, is the prediction being made by Stuart Thomson, Chief Economist at Ignis Asset Management.
According to Thomson, the SNB's decision to peg the Swiss franc/euro exchange rate backed by unlimited creation of its domestic currency is courageous in the truest Whitehall sense. "It subordinates monetary policy to foreign exchange policy and repeats the 1978 peg in a more sophisticated manner." "The immediate success of the policy in boosting the euro 8% has been helped by the phony war that often follows major intervention as markets pause to reflect upon the action. The SNB has contributed by selling forward option volatility to reinforce its commitment to maintaining the peg. Theo...
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