Tuesday 6 September 2011

Swiss Franc devalues 10% - trigger of a currency war?

At point of writing (Singapore time 1240am Wednesday), Europe and US markets continue to nose dive. European stocks plunged to the lowest close in over two years. US major indices are down ranging from 1.5% to 1.7%.

The highlight of the day was not the equity markets but the Swiss Franc. The Swiss National Bank statement follows:

"With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20," it said. "The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities."

Before the announcement EurChf was trading around 1.10! The move sent Europeans shares and the price of gold down! US markets followed. I wonder how the US markets will close?

Markets in the Asia Pacific region closed mixed. Markets that closed after Singapore time 4pm benefited from bargain hunting, namely, Hong Kong, Singapore, Thailand, Indonesia and India.

Markets had been extremely volatile. The constant monitoring and pro active management of

·         Bonds
·         Equities and Emerging markets
·         Commodities – Precious metal and agriculture
·         Economic data - Global
·         Forex – Safe haven and commodity currencies

had taken a toll on me. While I would not be making any proactive management, I will be closing all my positions (from mid August 2011) until I have rested well.

Meanwhile, trade well and good luck!


0 comments:

Post a Comment