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Old 07-09-2012, 09:04 AM   #21
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In June alone, the SNB printed another 60 billion CHF to defend the peg. That's a whopping rise of 20% in reserves in one freaking month. The SNB now holds an equivalent of 63% (CHF 365bn, GDP was CHF 580 bn in 2011) of the Swiss GDP in foreign exchange reserves. The official CPI is showing 1.1% annual DEflation:
http://www.ft.com/cms/s/0/840b26f8-c...#axzz208MsCbHr

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Old 07-09-2012, 10:37 AM   #22
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And here you can see how extreme the SNB's monetary policy is compared to other nations:
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Old 07-09-2012, 10:49 AM   #23
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WOW! That's some scary stuff. Just what the hell are tehy going to do if the Eurozone breaks up? What becomes of all those Euros they have??
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Old 07-09-2012, 10:57 AM   #24
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Originally Posted by ancona View Post:
WOW! That's some scary stuff. Just what the hell are tehy going to do if the Eurozone breaks up? What becomes of all those Euros they have??
They have diversified their reserves into USD, GBP, JPY. They've also bought German, Dutch goverment bonds. These bonds trade with a revalution premium because the market is discounting the scenario that these countries reintroduce national currencies (Deutsche Mark, Gulden). This won't solve the problem by any means, however.
That's one of the reasons why we're trying to pass a constitutional ammendment requiring the SNB to hold at least 20% of it's reserves in gold, stored in domestic vaults:
http://www.pmbug.com/forum/f2/switze...-reserves-434/

If passed, the SNB would have purchase gold for 45 bn CHF

I'm worried that it might be too late before this will be implemented
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Old 08-01-2012, 04:08 PM   #25
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Doodoo

The SNB is now printing an equivalent of 0.6% of GDP (~550 billion CHF) or 3 billion CHF EACH DAY to defend the peg = buy EUR. They can't even diversify their forex reserves out of Euros, so the share of Euros as of total fx reserves is growing. Things are totally out of control.

I've purchased 2 year (August 2014) EUR/CHF 1.10 puts to speculate on a collapse of the EUR/CHF 1.20 defense line. It might take a few months but this is going to end in a total desaster.

Quote :
Switzerland Is 'New China' in Currencies

By Alice Ross
Financial Times, London
Tuesday, July 31, 2012

There is a "new China" active in the currency markets, according to analysts, as Switzerland's battle to weaken the franc inflates its stockpile of foreign currency reserves.

The Swiss National Bank was forced to buy tens of billions of euros in May and June after the eurozone crisis worsened, creating strong haven demand for the franc and threatening the ceiling the central bank set for its currency last September. The SNB is prepared to buy as many euros as it takes to hold the franc at SFr1.20 against the euro to protect the country's exporters.

As a result, Switzerland's foreign currency reserves have leapt more than 40 per cent this year to SFr365 billion ($375 billion), propelling it to the sixth largest holder of foreign exchange in the world from ninth last year
, behind China, Japan, Saudi Arabia, Russia, and Taiwan.

The proportion of euros held by the SNB also ballooned in the second quarter of the year, rising from 51 per cent to 60 per cent. Foreign currency analysts said the bank was buying SFr3 billion worth of euros a day to defend the Swiss franc, with serious knock-on effects for the global forex market.

"Switzerland is the new incipient China," said Steven Englander, Citigroup's head of foreign exchange strategy.

The SNB is believed to be partly responsible for recent moves in major currencies including the Australian dollar and the Swedish krona as it seeks to offload some of its euros.

But that has consequences for other central banks, whose own currencies are rising in value as Switzerland sells its euros back to the market. The Swedish krona has hit a 12-year high against the euro in recent days, while the Australian dollar is at record highs against the single currency.

"Sweden will need to set monetary policy now with the SNB in mind," said Geoffrey Yu, foreign currency analyst at UBS.

Analysts also warned that SNB's half-year results, released on Tuesday, indicated that the central bank was struggling to rebalance its holdings as it appeared to be buying euros more quickly than it could exchange them for other currencies.

Figures showed a drop in the maturity of the SNB's bond holdings from four years to 2.8 years, which analysts said indicated that the bank was taking shorter-term positions because it did not know how long it would carry on accumulating euros at the current rate.

"The picture is one of a central bank that's not coping with how much money is coming in," said Kit Juckes, foreign currency analyst at Societe Generale.

The SNB declined to comment on its foreign exchange management strategy.
http://www.ft.com/intl/cms/s/0/d3176...44feab49a.html
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Old 08-01-2012, 04:25 PM   #26
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Zank you verzey much! /Germany

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Old 08-02-2012, 02:28 AM   #27
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Dumb question alert.

With the amount of reserves in different currencies, and possibly facing the scenario,
Quote :
If passed, the SNB would have purchase gold for 45 bn CHF
Why do they have to do it in CHF? I have a feeling the bullion banks would game the system on them immediately, unless the SNB was allowed (per legislation) to use a mix of currencies, so that no one currency was more singled out than others.
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Old 08-02-2012, 02:42 AM   #28
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Originally Posted by ancona View Post:
I give Bruce Krasting the same credibility I give spammers.
Yeah, he always comes off as a statist to me.
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Old 08-02-2012, 07:01 AM   #29
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Originally Posted by KMS View Post:
Dumb question alert.

With the amount of reserves in different currencies, and possibly facing the scenario,
Why do they have to do it in CHF? I have a feeling the bullion banks would game the system on them immediately, unless the SNB was allowed (per legislation) to use a mix of currencies, so that no one currency was more singled out than others.
No dumb question, they could use any currency reserves they want, absolutely.

I just calculated it in CHF as it is the unit of account for the SNB (and for me).
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Old 08-02-2012, 07:11 AM   #30
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congrats on your nice new jacket SA (-:

Your posts are always informative

thank you for taking the trouble to keep us informed.
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Old 08-02-2012, 07:17 AM   #31
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Originally Posted by rblong2us View Post:
congrats on your nice new jacket SA (-:

Your posts are always informative

thank you for taking the trouble to keep us informed.
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Old 08-02-2012, 08:07 AM   #32
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I was asked on another forum to clarify what the news in post #25 meant. Let's see if I get this right...

SNB instituted a peg to the Euro (defending 1.20) back in September 2011. They did this because Euros were flying out of Euroland into CHF (Swiss currency) and driving it up so high that it threatened to destabilize the Swiss economy (and definitely to signal the death of the Euro - no idea what stress it may have imposed on the "carry trade" markets). Euroland continues to buy CHF despite the peg and the SNB continues to print CHF to defend the peg. I'm guessing the Fed, etc. are all assisting the Swiss with swap agreements to buy some of their Euros with other currencies.

Capital flight out of the Euro has gotten so bad that the SNB is having trouble managing the FX reserves that they are accumulating in the process of defending their peg (can't swap the Euros for Dollars and other currencies fast enough). Thier out of control money printing is going to be highly inflationary for the Swiss at some point. They are also going to be left holding a very large bag of worthless foreign fiat when the system finally implodes (much like people were speculating vis a vis China holding dollars back in 2008).
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Old 08-02-2012, 08:20 AM   #33
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@pmbug: Entirely correct.
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Old 09-04-2012, 08:40 AM   #34
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Quote :
The head of the Swiss National Bank has vowed to continue its policy of halting rises for the franc against the euro and has warned that a stronger currency would be a "substantial threat" to Switzerland's export-dependent economy.
...
Mr Jordan's comments were made almost a year after the SNB introduced its policy of keeping the franc weak by maintaining an exchange rate of SFr1.20 against the euro.

The move, introduced on September 6 last year, was put in place following overwhelming demand for Swiss assets from foreign investors seeking a haven amid the eurozone crisis.

The SNB was viewed as so credible in the markets that its franc policy was not tested until May, when growing fears that Greece could leave the eurozone prompted fresh demand for the currency.

The central bank has since spent tens of billions each month buying euros to weaken the franc and hold the exchange rate at SFr1.20.

That has helped the SNB's foreign currency reserves to rise to record levels. The most recent figures show SFr406 billion ($425.9 billion) in forex reserves on its balance sheet at the end of July, an increase of 71 per cent over a three-month period.


However, foreign currency analysts believe the foreign exchange reserve figures for August, due to be published in coming days, will show that the pressure on the SNB has abated in recent weeks amid a period of relative optimism over the euro.
...
http://gata.org/node/11713
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Old 09-05-2012, 03:38 PM   #35
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For the first time since months EUR/CHF has broken out of it's ultra tight trading range between 1.2005-1.2015. Arround 8 am ET today it suddenly surged to 1.204 and stayed there until now. I don't know what this means yet but it is definitely significant.

I can currently imagine two reasons which are both related to tomorrow's ECB announcement.

A) somebody knows the ECB is going to do something spectacular like yield caps for Eurozone sovereign debt.

Or

B) The SNB knows that the ECB is going to disappoint tomorrow and wants a bigger buffer zone for the defense of the 1.2000 ceiling.
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Old 09-07-2012, 05:43 AM   #36
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EUR/CHF now at 1.215. Seems like the capital flight to Switzerland has been temporarily stopped by yesterday's ECB announcement.
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Old 09-28-2012, 07:08 AM   #37
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EUR/CHF is still holding at 1.21.

But Gold made a new all time high in CHF (and EUR) terms yesterday.
http://www.businessweek.com/news/201...rrency-concern
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Old 10-26-2012, 07:17 AM   #38
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EUR/CHF is still trading at 1.21 with basicly no volatility. That's very unsual trading activity.
My guess is that the SNB has secretly increased the actual peg by 0.01 . Robots and stupid hedge funds will probably not attack the CHF at this level because the official peg is at 1.20 . Additionally, they've probably found a way to mask their ongoing fx reserves increases by using either the BIS or Switzerland's tbtfb UBS and CS as a proxy for the interventions. This way the interventions have no effect on the SNB balance sheet

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Old 10-26-2012, 07:54 AM   #39
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Thanks for the update sa. Yea "free" markets!
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Old 11-13-2012, 08:32 AM   #40
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If volatility disappears due to central planning, increase leverage:
Quote :
Trading platform EBS says moving to half pip pricing in the EUR/CHF cross

- Says pricing change to take effect from November 26th.
http://ransquawk.com/headlines/tradi...oss-13-11-2012
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