Loading ...Login or register to post comments
Thu, 01/15/2015 – 06:36 | 5664006Haus-Targaryen
Haus-Targaryen’s picture
Why did they do this and why now?
This is the question.
If the EUR tanks due to QE or the Greeks, then now due to the pair — the CHF would skyrocket until the SNB came to the rescue and started buying a ton of EUR and EUR assets with CHFs. Thus, seems likely that they are anticipating a collapse in EUR value to such an extent that the SNB would not be able to keep up, so they decoupled early.
My guess is the QE + the Greek problem forced the SNB’s hand as they definitely didn’t want to do this.
Haus-Targaryen
Haus-Targaryen’s picture
Or, the inverse of the equation would be the SNB is expecting an appreciation of the CHF to such an extent that it could not purchase assets fast enough to hold the peg.
As I sit back and think about this — I think this would be the scarier option as it has the EUR surviving, but the CHF appreciating at a materially faster rate than the EUR. (E.g., another currency somewhere else in the world ora basket thereof goes to hell and quickly).
The more I “war game” this, the next few weeks will show us why they did this. They got a heads up from someone, and decided this is the best thing to do. I would imagine they have delayed this until the last possible moment.
Login or register to post comments
Thu, 01/15/2015 – 06:53 | 5664050Keyser
Keyser’s picture
There will be no QE for the EU… Not unless they want Germany to exit the EU faster than you can say boo… So IMHO, the SNB has decoupled from the Euro to keep from being drug down with it when it dies…