Biggest Currency Shock in Recent Memory

How the Swiss National Bank manipulates the market.

January 2015 ushered in unprecedented volatility in currency markets after the Swiss National Bank (SNB) removed its peg on the EUR/CHF pair (euro to Swiss franc).

  • January 15, 2015 – The Swiss National Bank reverses its decision to peg the EUR/CHF relationship.
  • Almost 3.5 years after the eurozone crisis began impacting Swiss exports, the nation’s monetary policy leaves the SNB with a 38 billion (CHF) profit in 2014!
  • Hedge funds and brokers went bust on the heels of the recent move.
  • A risky USD and Yen made the Swiss franc the haven of choice during the Eurozone Crisis.

Since 2011, the SNB has been dousing foreign currency markets with francs in order to minimize the overvaluation of the franc to the euro - a process that sprung from the government-debt crisis in Europe. On January 15, 2015 that peg was removed, and the resulting price action made fortunes for some investors; and crippled others.

>> Full article over at SeekingAlpha.

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