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It costs less than US$1 90 inches. This is the first time Frank is this strong against the dollar in more than two years. And above all, while the Swiss financial center is making some pretty embarrassing headlines around the world: Credit Suisse’s death has done great damage to the reputation of the local banking industry.
But the Swiss franc continues to enjoy a high reputation internationally. “This is thanks to the monetary policy of the Swiss National Bank, which is clean compared to other countries,” said Alexandra Janssen, 33, a monetary policy expert at technology and investment advisory firm Ecofin. Inflation in Switzerland is currently 2.9 percent. 8.5% in the euro area, 5% in the USA.
Despite high inflation, investors in the US already expect the Federal Reserve (Fed) to stop raising interest rates. st. “In Switzerland, the SNB is likely to raise interest rates again in June,” predicts Thomas Stucki, 60, head of investment at Wales Kantonalbank. The inflation gap between Switzerland and other countries will continue, even if it does not widen. Accordingly, the Swiss franc will remain strong.
Economist Klaus Wellershoff (59) even expects the franc to rise in value over the next few years. “According to our calculations, the trade-neutral exchange rate would currently be $1 US against 80 cents,” Wellershoff says. While the Swiss franc is currently very valuable, it is still undervalued by this calculation.
The Federal Council’s application of a state of emergency law to the takeover of the CS brings him political criticism. On the other hand, it receives little attention in financial markets. “They make more sense,” Wellershoff says. In any case, banks are not very decisive for the exchange rate development. “The pharmaceutical and machinery industries play a bigger role because they export and import so much.” This is where exchange rate differences come into play.
Still, Switzerland cannot entirely live up to its reputation as a safe haven, warns Alexandra Janssen: “Actions such as the collapse of the CS could damage the reputation and legal certainty of the Swiss financial center gradually, rather than suddenly.”
It will be far more important to the reputation of legally safe Switzerland that the emergency law is not reintroduced any time soon.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
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