I mean, wow. The day was a volatile mess too. If you are wondering what they did, picture this. You are surrounded by EU countries so naturally you value your own currency (in their respect, the Swiss Franc) by that of the Euro. But because your country houses everyone's money as safe haven, your currency is one of the strongest in the region. That's good news and bad news. Strong currency is always great unless it starts to affect your exports. If my car costs 50000 in francs, who will buy that via export in, say, Spain, when in their currencies it would be WAY too expensive. So Swiss are stuck with their products (watches, chocolate, etc...). So three years ago they did something unprecedented and put a floor limit on the exchange rate of the France vs Euro. Meaning that the Euro can not get BELOW 1.20 euros and for 3 years they were doing fine. Last night, without anyone seeing this coming, they got rid of the floor cap and guess what happened? http://www.ft.com/cms/s/0/36ee9504-9ccd-11e4-adf3-00144feabdc0.html#axzz3Ow62fvLJ
Btw, many articles are calling this a ceiling cap. It's not. Technically it's a floor limit (down vs up). Bonus question: What do you think this will do to the Euro and not just Franc vs Euro?
Considering the Swiss are viewed as fiscal powerhouses with a strong currency, it's not going to be a huge surprise when the Euro takes another swan dive off the deep end.
Here's What the Swiss Central Bank Just Did and Why It's Such a Shocker - Businessweek Hmmm, they may be looking to tie the CHF in with the dollar? Not sure I'm wild about that idea.
The dollar's already the reserve currency of choice across the entire planet, so all that it would do would be to hinder American exports to Switzerland. Whatever we export to Switzerland...
I was going to joke that it was watches we exported to Switzerland until I looked at this link. Scroll down to a list of U.S. exports to Switzerland: Top US Exports
I'll tell you a bit more about life in Switzerland. I have a few a few "iffy" websites that I registered and told them I lived in Switzerland (with an address and FAX phone number to go with it) and I don't get charged VAT if I'm in Switzerland. Apparently they don't pay VAT in Switzerland. Or at least I don't when I live there. It cuts 20% off the cost of my website domain registrations. I really like living in Switzerland. I can see Russia from here.... Please don't insult my intelligence by asking which websites.
