Skip to content

Swiss Franc Rising – Economic Miracle or Walking Zombie?

swiss-franc-picture-courtesy-of-the-investment-site-at-wwwdoitinvestcom If you are a forex trader, you of course noticed the advance of the CHF (swiss franc) against most of the other currencies. According to the OECD’s calculations, the swiss franc is 44% overvalued against the dollar and 42% overvalued compared to the euro. And this has happened steadily in the last 6 months or so, without a retreat.
What would be the explanations?
One of them, widely accepted among the forex traders, is that the CHF is a so-called proxy (similar indicator) for gold and other commodities. It is understandable that the investors are not willing any longer to bet on the gold, which has risen 6 times during the last years and which is causing a “tulip mania” among masses. And whilst other commodities are harder to trade and more volatile, the CHF is still a paper currency, backed by the Swiss National Bank, which has some advantages.
Another explanation is that the Swiss economy is faring much better than the edge-of-default US’s one or the debt-burdened one of European Union’s. And being near the export power-house of Germany has for sure helped Switzerland and the CHF. The question remains though, since such an overvaluation requires more than the differential economic advantage that the CHF has now.
All in all, CHF has reached a peak now – and the Swiss National Bank is not willing to see it further appreciating. So a bet on the sell side on the CHF could be a winning one – the question if – when will it start to fall?
Article researched and written by – please quote the source when replicating it.

Leave a Reply

Your email address will not be published. Required fields are marked *