HiFX comments on the SNB’s exchange rate move
Andy Scott, associate director of FX advisory services at foreign currency specialists, HiFX, comments on the SNB’s exchange rate move
Swiss national Bank causes chaos after their surprise move
Andy said: “The SNB announced on Thursday morning that it was removing its minimum exchange rate between of 1 euro to 1.20 Swiss francs and was cutting its deposit rate further into negative territory, causing chaos in the FX markets. EUR/CHF collapsed by almost 28% following the announcement with the franc shooting higher across the board, against other major counterparties such as the pound and the U.S. dollar. The decision came with little prior warning and looked a bit reckless given the subsequent reaction in the markets with banks struggling to quote as the price flew around wildly and pricing tools such as Reuters unable to keep up with the pace of the move. The SNB said that it felt they no longer need the cap as the franc was no longer as overvalued as it had been thanks to the cap existing.”