FCD Currency World Cup
For the first time in the FCD World Cup the result was not matched in the FIFA world cup. Yesterday we saw it was clear that Sterling was far stronger than the Uruguayan Peso however, despite having a Sterling on the pitch England were unable to live up to their currency in a dissapointing match for the English. Today we are examining the Swiss Franc against the Euro as Switzerland take on neighbours France in a top of the table clash in group E.
Switzerland – Swiss Franc (CHF)
The Franc remains a heavily traded currency across the globe and due to the countries reasonably stable political and economic conditions is considered a safe haven currency which means that in times of conflict and global financial instability investors place their funds in safe haven currencies such as the Swiss Franc. So, during the global crisis the Franc strengthened considerably as more and more funds were placed into the CHF and as a result the Swiss National Bank (SNB) had to intervene in order to prevent the Franc from being overvalued and so loosley pegged the currency to the Euro. The SNB stated that they would buy foreign currency in unlimited quantities to keep teh Franc at the desired level and following this comment the Franc lost 9% of its value in 15 minutse! This did have the desired effect and halted the CHF’s rise but the demand held strong and in fact the SNB put their nominal short term interest rates to negative levels. All of this was to keep the CHF steady in order not to damage the Swiss export market and while this did help keep Swiss goods and more importantly services at a competitive level but did damage the CHF’s safe haven status. Recently the issues in Iraq have again led investors to place their funds into the Franc and so the currency is once again strengthening. The rate for GBP CHF is currently £1 euqates to 1.52CHF.
France – Euro (EUR)
The Euro remains under pressure as the single currency economy continues to suffer with falling inflation and interest rates recently cut to a new record low and confidence dropping the European Central Bank continue to face some difficult decisions about how to combat this situation. As a result the Pound has remained high, close to a two year high against the Euro, and the outlook remains strong. Today there is very little economic data for the Eurozone however next week the European Council are due to meet with leaders of member states coming together to discuss all issues currently faced which means we could well hear some interesting thoughts and comments about how to tackle the current challenging economic climate.
Currently the rate of exchange on the EUR CHF is €1 to CHF1.2168 showing the Euro to be slightly stronger, however comparing the two economies the safe haven status and the slightly more stable political and financial status does make for a strong case for the CHF however, the Euro’s slightly larger economic status and more heavily traded currency means the Euro and therefore France just pip the Swiss. The question is, will the FIFA world cup get back on track to following the FCD Currency World cup again?
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