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Can SNB Hold EUR/CHF Above 1.2000?

September 12, 2011 by Andriy Moraru

The Swiss National Bank has announced a minimal level of the national currency (Swiss franc) relative to the euro almost a week ago. During these 4 and a half days of trading, the EUR/CHF rate moved in a range slightly above 1.2 level — between 1.2009 and 1.2185, which is within 1.5% of the target peg level. Currently the EUR/CHF currency pair is trading near 1.2050.

As I’ve already written, I perceive this situation as an interesting carry trade opportunity, which means that I am pretty sure in the long-term nature of this Forex market manipulation measure. Mike Kulej reminds us that the SNB has set a ceiling for the franc (or a floor for EUR/CHF currency pair) rather than a real peg of the two currencies (after all, SNB isn’t going to be mirroring the monetary policy of ECB, for now). But that fact doesn’t change much for the EUR/CHF carry trade. The question is whether SNB will preserve its commitment to hold the rate above 1.2000 and whether it will be capable of doing so. What do you think?

For how long will SNB hold EUR/CHF above 1.2000?

  • At least until 2013. (27%, 25 Votes)
  • For several weeks. (24%, 22 Votes)
  • No longer than by the end of 2011. (20%, 18 Votes)
  • Through the first half of 2012. (17%, 16 Votes)
  • For few more days only. (12%, 11 Votes)

Total Voters: 92

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If you want to share your thoughts or ideas regarding the SNB’s ability to hold EUR/CHF rate, or if you want to ask any question regarding the situation with the franc’s ceiling rate, please feel free to reply using the form below.

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