The Swiss Mayhem

History of Swiss Franc

Swiss Franc or CHF has always been

investors safe haven

Stable Government
Well Balance Budget
High GDP
Does not involve in Quantitative Easing
Has been banker of the world for many years
Export of goods, services and tourism = 70%
of its GDP

Investors Greed
Investors Demand for CHF
Market value of CHF
Swiss Exports () becomes
expensive
Tourism () becomes expensive

SNBs Solution
Referendum 2009
Introduced

exchange rate
peg (Sept 2011)
Artificially brought

down the value to

CHF 1.2 /

SNB Currency Holding

vs. GDP

SNBs dramatic decision

Swiss were angry that SNB has been piling up huge FX reserve ($

480 Billion)
Several Euro Zone countries have been expecting ECB to get into

Quantitative Easing for Euro supply in market => value of Euro

goes down => SNB again prints more Franc to maintain the cap

implies CHF

Cheaper Franc implies higher export to US and IN (20% of Swiss

exports)
SNB lifted the cap of fixed rate against on January 15, 2015

The Final Outcome

Markets Caught offguard

SNB stopped controlling CHF
Supply of CHF fell
Also impacted $ and which in turn
impacted other currencies globally
Huge losses to banks and customers
till the currency stabilized again