Swiss National Bank’s shock move to cap the Swiss franc pushed Norwegian krone and even Swedish Krona higher on Tuesday as bewildered ”safe haven” investors were looking for new options. SNB said it will no longer tolerate EUR/CHF exchange rate below minimum rate of CHF 1.20 and says it is ”prepared to buy unlimited quantities of foreign currency”
The move from SNB is certainly controversial and against old adages of what is sustainable long term (ie. unlimited quantities is still less than that boasted by Mr. Market), but it did provide the desired effect initially. Swiss exporters of course applauded the move and now it remains to be seen if this is the new panacea that will soon be used by other central banks. Certainly the race to weaken ones currency is on.
Central bank of Sweden Sveriges Riksbank held its REPO rate unchanged at 2.0 per cent. Riksbank now expects slowdown in the Swedish economy to be more pronounced than what seemed to be the case just couple months ago due to global concerns over public finances.
Riksbank cut its REPO rateforecasts slightly and said it is now appropriate to postpone planned rate hikes ”somewhat”. Even still, the current expectation still calls for another rate increase this year. Two Debuty Governor’s were calling for repo rate to stay at 2% for an extended period of time
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