A recent report from the UK's Guardian newspaper states that the Swiss Bank's de-coupling from the euro cap is not only hurting forex traders and brokers alike.
It is also leaving a tsunami of destruction in other business spheres – from Swiss ski resorts to Swiss watchmakers.
The Swiss action is the latest to rattle the forex markets, in a new year, which has barely just begun, with the move wiping 9% off the value of the Swiss stock market in just one trading day. This was its biggest fall in nearly twenty-five years. One trader described the market reaction as “complete carnage.”
The Guardian’s article states that, Manufacturers in Switzerland’s northern belt are likely to feel the impact first as their exports to Germany and other eurozone countries become far pricier.
Swiss watchmakers, who were already battling with weak demand in Asia, suddenly had this bad news day to contend with, just to add to their woes.
Nick Hayek, the chief executive of the Swatch watch group – which owns brands such as Omega, Longines, Tissot and Calvin Klein watches and jewellery – said: “Words fail me …today’s SNB action is a tsunami; for the export industry and for tourism, and finally for the entire country.”
It is also expected that the Swiss tourism business is likely to be hard hit, due to the soaring rise in the value of the Swiss franc – slap bang in the middle of the one of the busiest holiday season of the year, for Swiss ski resort operators.
Last Thursday the Swiss Central bank called time on the Swiss franc being ceiling-capped to the euro in a shock move, which caught the forex world by surprise – forcing Alpari, UK, Ltd, to call in KPMG as administrators and Zealand’s Global Brokers, also being forced to cease trading.
The Guardian goes on to state that market traders suspect that reason for the Swiss National Bank (SNB) for abandoning its three-year Swiss franc/euro ceiling campaign was to prevent the Swiss franc damaging Swiss exports, by becoming too strong against the euro: amid strong signs that the European Central Bank (ECB) was about to announce a large scale quantative easing programme...in an attempt to lift the eurozone out of its current deflation syndrome.
by Victor RomainPublication source