Swiss National Bank takes action over currency surge

mar bonnin palmer

The financial world was in shock today as Switzerland announced plans to deliberately weaken their currency.

The Swiss National Bank (SNB) stated that it planned to buy unprecedented levels of foreign currency in a concerted effort to drive down the value of the Swiss franc, which has surged in popularity recently.

Although this seems positive for the Swiss economy, if this trend continues it could lead to buyers having to pay more for Swiss products in the future. This is a situation that Switzerland wants to avoid at all costs.

“The current massive overvaluation of the Swiss Franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development,” reported an official statement from the Swiss National Bank.

“The Swiss National Bank is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of 1.20 francs.”

The move has sent shockwaves through the global currency market in general though.

As issues over the health of important economic strongholds such as the U.S.A and the Euro zone refuse to go away, this move threatens to destabilise the situation further.

Switzerland will state that they are acting in their own interests and are likely to care little about the external consequences of their actions, as long as they can safeguard their own immediate financial future.

Transfer Money to Switzerland

If you are looking to invest in Switzerland, think carefully about how you will be transferring money to Switzerland. Foreign currency exchange rates quoted by banks are almost always worse than the exchange rates available through specialist currency dealers.

So if you are sending money to Switzerland – which you will inevitably have to do if you are looking to make a property investment, be sure to compare the market before you buy your overseas currency.

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