“In Italy for thirty years under the Borgias they had warfare, terror, murder and bloodshed but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love; they had five hundred years of democracy and peace and what did that produce? The cuckoo clock.”
Orson Welles said that after The Third Man had been shown in Switzerland a man came up to him and said, "Actually you're wrong, the cuckoo clock is made in Bavaria, Germany." Well the Swiss have embarked on something that could be more interesting as a spectacle than a wooden bird popping its head out of its home on the hour by announcing the pegging of the CHF (Swiss Franc) against the Euro.
The news reported this morning by City A.M could all end in tears as central banks across the world look to devalue their own currencies. The Swiss National Bank (SNB) has said that it will defend its own position by "buying foreign currencies in unlimited quantities."
This interesting because Switzerland has always been seen as a safe haven for investors, even more so in recent times due to the problems of the Euro, by pegging its currently so aggressively it could become a no-go area for investors. Swiss manufacturers and exporters are currently struggling due to the strength of the CHF.
A strong currency is one whose worth more relative to other currencies. Because most currencies are floating their values vary according to market trends. When one unit of a currency trades for more units of another currency, it is known as a strong currency. When a currency is strong, travelers are able to go abroad while spending less of their money, but it makes exports more expensive in other countries. A strong currency can be disinflationary for currencies pegged to it.
Chapeau Aunty Rose.
3 comments:
Psycho, Halloween, Friday 13th...this is more of the same horror and when holding a cushion in front of your eyes you can't enjoy it or eat popcorn.
Can't help but feel the big neighbour to the north may be involved.
OMG! Why does it all have to be so bloody complicated!
It is an extraordinary thing for the Swiss to do but because of the Euro crisis and David Cameron telling MP's there won't be a referendum on the EU it's not exactly big news.
Span - I didn't take you for a conspiracy theorist.
Shy - I know, if it was simple we wouldn't be in this mess.
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