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Home › Forums › Financial Markets/Economics › Swiss Franc unpegged from Euro
[quote=spdrun]
(2) Wonder what’s in it for Switzerland. Are they just protecting themselves against the effects of Euro QE and encouraging capital inflows if Euro QE happens? Will it hurt their economy, making their products and travel to their country even more expensive?[/quote]
They did it because in order to maintain the currency peg they had to commit to the same level of QE that Draghi is/will undertake. They just couldn’t go along with having to do that much QE so they gave up the peg. They might end up with some short term pain but it’s likely not going to be as bad as trying to maintain the peg through ECBs next round of QE.
[quote]
(4) Any way to take advantage of this at this point? Opinions on the future direction of the Franc?
[/quote]
Short the entities that were short the swiss franc in significant quantity, although that’s easier said than done.
Once you get a currency move this big it’s not going to be the end of the trend. Maybe we get a dead cat bounce but I’d expect the Swiss franc and US dollar to continue to appreciate against the Euro in the short/medium term. Obviously there will be some volatile counter direction swings from time to time. I honestly think that we might see Euro/Dollar parity within the next 12-18 months.