 Poster: A snowHead
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EUR/CHF hit 1.0360 this evening with Sterling Kiwi topping out just beneath 2.05 and back on the downtrend below 1.95-
Sterling once again looks vulnerable in the short term with GBP?CHF around 1.1750 Interbank so anything above 1.1400 will look good on retail ;o(
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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| Chris Angus wrote: |
nixmap, in the short term only option 2 will get people back to Switzerland- prices will have to be cut. We were in Zermatt in January- hotel was 350 francs a night (not even that special) ski pass was around £300 as I recall. Since January franc has strengthened by 20-25% to about 1.25 to the £- so the ski pass will be around £360 and the hotel would cost just shy of £300 per night. That's a lot of money and would go a very long way in Austria, Italy or France. This ignores the fact that Brits are becoming increasingly irrelevant in terms of the visitor demographic in certain parts of the Alps- there were far more Russians in the hotel with us (in fact I think we were the only Brits).
Option 1 is unlikely to happen any time soon- the Swiss government has no means to weaken the currency anymore with interest rates now at 'as close to zero as possible'. Option 3 requires wage inflation for people to have 'more' money which is also not going to happen in the near future- price inflation yes- but that will mean people have less money to spend on holiday in Switzerland. |
I have rarely seen switzerland motivated by short term arguments, granted the swiss franc is over bought. by people who are in complete panic about
1) Rampant Euro Zone Fiscal socialism.
2) Indeciveness from the world economic leader (U.S.A)
3) Social unrest in the UK caused bt economic austerity.
4) A powerful German nation becoming increasingly both insular and unpopular at the same time.
These things will disappear over time, and if not, your arguement about tourism really doesnt matter.
Option 3 requires wage inflation.... Err no, it doesnt. Your standard of living would reduce
Either way where would you like you monomy
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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| nixmap wrote: |
I have rarely seen switzerland motivated by short term arguments, granted the swiss franc is over bought. by people who are in complete panic about
1) Rampant Euro Zone Fiscal socialism.
2) Indeciveness from the world economic leader (U.S.A)
3) Social unrest in the UK caused bt economic austerity.
4) A powerful German nation becoming increasingly both insular and unpopular at the same time.
These things will disappear over time, and if not, your arguement about tourism really doesnt matter.
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Good thing Swiss aren't motivated by short term arguments. For they'll be waiting for a rather long time for any on your list to discipate:
1) Rampant Euro Zone Fiscal socialism. -- that will take a long time to take effect.
2) Indeciveness from the world economic leader (U.S.A) -- Americans may be known for a lot of good qualities, decisiveness isn't one of them. And the political system is a reflection of that.
3) Social unrest in the UK caused bt economic austerity. -- This is one that probably won't last too long. Or the exchange rate would be the least of the snowheads worries.
I don't know enough about Germany to comment on the last.
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nixmap, re inflation that's the issue for any tourism/discretionary spend (and was precisely the point I was making)- you will have inflation for the time being in UK/Eurozone (and tax rises), but wages will not go up, discretionary spend (living standards) will go down. That's not good news for the tourism industry anywhere.
The short term comment relates to small business (i.e. hotels/restaurants etc) not government policy- if custom dries up small business will have to cut prices to try and bring custom back. I believe Swiss CPI is already showing deflation- July CPI showed 0.8% deflation.
Swiss franc may be over-bought but that's like saying gold is over-bought at the moment.....it's seen as a safe haven and is likely to remain so for the foreseeable future. I see the Swiss government has now said it is going to take energetic measures to weaken the franc- it'll be interesting to see what they are!
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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The Swiss can reduce interest rates Chris Angus, unlike the UK and USA. They can also print some money, and fuel inflation.
China has got an inflation problem because it will not let its currency appreciate like the Swiss franc.
Which is better, inflation of internal prices or inflation of your currency?
It depends on how much your economy depends on exports!
A safe haven is a place where the price will not fall because it is over-valued!
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Bigtipper, Swiss interest rate was reduced last week and is 0-0.25% already so lower than UK and same as US, granted they can go negative as in the 70s. They also created SFR50billion last week. That's not been hugely effective.
What we're talking about here is a Swiss export though- tourism- which is liable to be hit hard.
Whilst it's perceived as a safe haven (or everything else as relatively more dangerous) it'll stay strong.
See the article on today's FT.com - to paraphrase it- strategists doubt that Switzerland will be able to stop the franc from strengthening further.
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The price of gold went up in the 70's quite a lot. However, it then went down and did nothing for 20 years. Guessing when the peak is going to be reached, is a game which only those who are going to sell play.
The bubble in Swiss francs and gold may well go higher. That does not mean it will stay there!
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Nope and let's hope it doesn't stay there....the guessing is a game for those with far deeper pockets than mine....my purely selfish position is that Switzerland looks expensive for my skiing holiday  and as much as I love Zermatt I think, at present pricing, it's time to stay over the hill in Cervinia or head to Austria.
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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| Bigtipper wrote: |
The price of gold went up in the 70's quite a lot. However, it then went down and did nothing for 20 years. Guessing when the peak is going to be reached, is a game which only those who are going to sell play.
The bubble in Swiss francs and gold may well go higher. That does not mean it will stay there!
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The world is running out of gold.
Peak-gold was reached in 2000.
Right around the time the gold price started creeping up.
The gold price will continue to rise for the next 50 years as it gets ever scarcer.
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Some suggestions for what the SNB is going to do.
Engage in Swaps to increase near term liquidity.
Charge a Levy on Deposits for non residents. (amounts to negative interest rates)
Issue CHF 20,000 to every swiss national. (very popular and effective)
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snowHeads are a friendly bunch.
snowHeads are a friendly bunch.
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nixmap, I like the latter 2... hope Permis C counts...
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And love to help out and answer questions and of course, read each other's snow reports.
And love to help out and answer questions and of course, read each other's snow reports.
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nixmap, The swaps were used previosly to control money supply, effect interest rates and to ensure that there was effect upon the exchange rate. Using in reverse seems to make perfect sense however it will be like driving a an articulated lorry backwards at fullspeed down a mountain. Lots of bends and is not really the right solution.
I'd suggest doing the exact opposite of what Gordon Brown suggests. 
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You know it makes sense.
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Back up above 1.25 today following the SNB announcing a range of possible interventions yesterday.
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Otherwise you'll just go on seeing the one name:
Otherwise you'll just go on seeing the one name:
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Steve Sparks, are you sure that's not the buying rate? best I can see is 1.206 selling and 1.28 buying
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Poster: A snowHead
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I'm following the spot on the BBC not tourist rates. They quote the low as 1.17.
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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Steve Sparks, good news - I see my broker is at 1.25 too
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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swiss going for negative intrest rates again .. like in the70's.... shorterm has taken the frotth out of the swiss strength but i think the mkts will test the SNB's reslove... i was goin to steer well clear but a mate of mine has just got a job out there so i may have to bite the bullet and cough up for a swiss ski trip next year.. ouch!!! there was a rumour of the swiss melting some of thier gold and handing it out to the population in the form of gold coins.. good way of getting all the swastikas off it i suppose....
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You need to Login to know who's really who.
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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nixmap, yep we are not taking share tips from her 
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nixmap, That doesn't sound very gracious and I expect she managed to have a really good night out with that. Maybe even a meal! 
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Steve Sparks, The BBC is a broadcasting company, not an FX wholesale business, and whilst their reporters are better than most they are also journalists. 30 years of Reuters direct news feeds and word of mouth from government/politicians has taught me to take most of what I read or hear in the press as interesting news, not fact. Asking the BBC for FX rates is a bit like asking your butcher for a pint of beer 
The last time the spot GBP/CHF bid was as low as 1.1700 was around 03:20 Friday morning and at the time of your posting it was approx 1.2520 bid. Retail rates will be anything between 2-5% for tourist stuff, with 3% more or less the norm. You can compare this with say 1.1420 for GBP/EUR v 1.1200 for FairFX, 1.1069 for the post office and 1.0432 for Travelex at LHR. Moneycorp track +/- FairFX or vice-versa on their actual quotations depending upon time/currency/size and currently quote a wider range of currencies. MC rates on the screen are wholesale mid rates with a minimum 15 minute delay.
The BBC link http://www.bbc.co.uk/news/business/market_data/currency/default.stm lists wholesale seems to list wholesale (interbank mid rates) and the actual low on the offered side for GBP, where banks buy CHF was around 1.1520, not 1.1722 as the BBC report misleadingly. The market rates I've quoted were retrieved from the IGIndex live charts when logged into igindex.co.uk
If you are looking for reliable indicative rates that you can actually deal on then I'd suggest http://www.fairfx.com/ and for accurate information www.bloomberg.com although their FX rate reporting isn't that hot (they reserve that for their professional, paid for service) www.schwab.com for US equities and comments is good, and their live trading service is exceptional.
I'd suggest on that basis that using, let alone quoting the BBC Forex rates really isn't a good idea.
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This graph puts the recent upswing of the £ against the ChF into perspective.
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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Jivebaby, I'm not a dealer. I'd be somewhat surprised if anyone looking to deal would be using snowheads as a source of intelligence. If you're trying to work out what your lift pass and a pint of beer will cost I think the BBC is probably a good enough source.
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Where the comparison is pretty stark is lookng at car hire prices from the swiss and french sides of Geneva airport. I know this topic has been covered in depth in th past with most advice seeming to favour hiring on the swiss side. However with the strenght of the CHF the cost of hiring on the swis side is now nearly double the cost of the same car on the french side!!! I realise there are a few additional hidden costs on the french side but I still find it incredible that he same car can be so diffeent in price only a few hundered meters apart!!!
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snowHeads are a friendly bunch.
snowHeads are a friendly bunch.
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If the rate sticks around 1.25 to the £ then my Wengen ski holiday in Feb will cost me about 25% more than last year. However the slopes should be quieter and i will be drinking less.
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And love to help out and answer questions and of course, read each other's snow reports.
And love to help out and answer questions and of course, read each other's snow reports.
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You know it makes sense.
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holidayloverxx, cheers but i'm up north. I'm really tempted to just wait and see, surely the rate can't get much worse and you never know between now and Easter it could get better or is that just wishful thinking?
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Otherwise you'll just go on seeing the one name:
Otherwise you'll just go on seeing the one name:
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sunnbuel, The Swiss National Bank are committed to actions to defend the CHF. How much success they will have and for how long I don't know. They have elections in October and it is now becoming a political issue. Their economy will seriously suffer if they can't do anything about it.
I'm waiting before buying more CHF as I already have a decent stash over there.
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Poster: A snowHead
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sunnbuel, You did well to keep a balance at 1.82 and you must have had them at least since December 2008.
Depending upon how many you need (how much more) you would perhaps be as wise to book anytime soon on the basis that you can average.
The Swiss Franc has always been a strange beast, and to a great extent has tracked Gold as a safe haven currency. It’s been pretty clear that most western currencies are fundamentally flawed due to the economic pressures, mostly self inflicted and the external ones of Oil and Food.
The SNB have a huge dilemma: Firstly you need to understand that the GBP/CHF is largely meaningless to the Swiss. Firstly because the critical exchange rate for Switzerland is the EUR/CHF rate: The SNB were perfectly happy with 1.50, less happy at 1.40 and extremely concerned at heading for parity at 1.00. Bearing in mind how important this is to the Swiss, it’s pretty obvious that they were struggling to provide any antidote for the problem.
Secondly, any action the SNB takes is going to need external help in the form of positive economic developments in the rest of Europe and the US.
Thirdly, the GBP/CHF is largely irrelevant as whilst a fair number of dwindling brits visit Switzerland, the Swiss, economically speaking are only interested in the wealthier Brits, and the rich can and will continue to come whatever the exchange rate. The rest can go to France, Austria and Italy if they are skiers. If you’re with me so far, you’ll appreciate that the GBP/CHF rate is merely a passenger in this fandango and that if the Swiss can get the Franc back up to 1.50 which would imply GBP/CHF at 1.70 based upon the current Sterling dynamics, and anything lower than 2.30 or so expensive, and on paper, overvalued. That’s the simple theory.
For the Franc to weaken substantially the Euro needs to regain credibility and investors need to have a good reason not to buy Swiss Francs? At the moment, even with the best intentions of the SNB, those reasons are thin on the ground. The Swiss, especially those that don’t have jobs dependent upon the EUR/CHF exchange rate are largely happy with a strong Franc, so whilst it’s PC to cry, not that many Swiss have real tears. Ergo value of the France may not be a huge election issue.
The practical side is that we’re looking at 1.25 or so with a UK economy besieged by politicians on every side who have always erred (wrongly IMO) that a weak currency encourages exports. Bearing in mind the UK has a huge trade deficit, the overwhelming proportion of goods and food we consume are imported. A weak currency therefore only drives up import costs and boosts inflation. The double whammy is that imported goods means less domestic production so we have a shrinking manufacturing base which has more than halved over the past 15 years and sadly that means fewer jobs too.
So you asked should I buy Swiss Francs now? If you believe sterling is unlikely to appreciate (V the Euro) and/or that the Swiss will struggle to weaken their painfully overvalued currency (Versus the Euro) then perhaps you will conclude that 1.25 is a lot better than 1.14.
To an extent, I’m in the same boat as you –I have parking charges in CHF but have enough stashed for the next 5-6 years providing I don’t eat or drink when passing through! I’m skiing for three weeks in Verbier too this coming season –hotel is booked/paid for, courses are booked/paid, so I just need accommodation for the other two weeks. I’ll buy a Chamonix MBU season pass using Euro’s as soon as the pre-season block is released to subscribers and I’m expecting that to increase by around 2.2-2.5% in Euro’s over last season. Fingers crossed on that, but if I were you, consider setting a stop loss at 1.20 and a hopeful target at say 1.45/1.50?
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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Jivebaby, clever you, yep i got them in 2008 for a major trip and never got around to cashing the left over - just as well Thanks for the advice
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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| Jivebaby wrote: |
| ... a UK economy besieged by politicians on every side who have always erred (wrongly IMO) that a weak currency encourages exports. ..... |
Whilst primarily focussed on UK and Irish trade, the company I work for recently exported to a project in Berlin. That would have been unthinkable a few years ago.
But I agree with you that the Swiss preoccupation must be with the € not the £. But for those of us who are Brits but not super rich, I am inclined to think that the exchange rate will makew Swiss skiing prohibitive for the foreseeable future, now matter what tinkering the SNB indulges in.
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You need to Login to know who's really who.
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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Jivebaby, indeed. And thank you for your enormously interesting and informative posts.
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sunnbuel, I meant to ask - Which pre-paid card do you use?
I ask as, based purely upon rates and service, I regard FairFX very highly, especially for their retail offering but at the moment they are not offering Chf: I opened a Postfinance account which does the trick, but they only open accounts for people with jobs &/or property in Switzerland or countries that border it. They apply this rule rigorously, otherwise the Swiss Franc could potentially be subject to excessive demand and perhaps become overvalued!
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If you have been watching the UK banking sector share prices recently, you might get a clue as to how the exchange rate may go in the future. Of course the banks have much better capitalisation than they did in 2007/2008, and so are perhaps better able to withstand the effects of a downturn in global consumer demand. (in particular lower demand for housing)
However, the prospect of such reduced expectations of demand, are having a siginficant toll on share prices.
Should a large bank or two require intervention to improve "liquidity" again, we may see a similar £ currency drop as we say in 2008/2009.
I do not know much about how coco bonds work, and how they convert to equity, but what I do know is that their conversion will significantly dilute equity (so perhaps this is why share prices are falling so much in bank shares)
So whilst these banking/currency issues persist around the world in USA, UK, Europe, money keeps flowing into gold and CHF. You cannot beat the market as a central government of a free floating currency. Even if the market is wrong and the global banking system is not a giant ponzi scheme which requires people to believe in its money creation abilities.
It is that belief that is being eroded, and when trust is lost the banking system cannot survive. A "run on the bank", is a self fulfilling prophesy. It causes what people fear. Taking money out of the banking system causes the banks to fail.
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Bigtipper,
| Quote: |
| and the global banking system is not a giant ponzi scheme which requires people to believe in its money creation abilities. |
This only applies if as you say this relates to share prices: Money creation is for shareholders, not depositors.
The more (IMO) important thing regarding a run or runs on bank/s is the customer belief/trust that the bank will repay their money: I'd argue that many banks exist not only because they have received external support (sometimes from taxpayers via Govt funding) but perhaps because greedy depositors chased unsafe yields without suffering the direct consequences: Think BCCI, Madoff, Standford etc: History is littered with an enormous list of too-good-to-be-true investments. I strongly believe that all governments must regulate effectively and that government guarantees must all but disappear to balance the risk/reward equation leaving the risk (of non-repayment) with the depositor. Leaving a £20- 10,000 guarantee at 100% then perhaps 50% thereafter would make people think a lot more carefully where they put their money. Badly run banks would then not receive the deposits to grow their loan/derivative books etc, thus reducing the systemic risk. It would also stop idiots like Vince Cable advocating that banks lend more to businesses that perhaps cannot repay -if the banks follow his lead, then current events will only return to haunt the UK as lessons clearly haven't been learnt.
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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The big question regarding money flows into Switzerland is who is transferring money there?
It is not Insurance companies, and pension schemes in the UK. It is not private individuals of modest or low wealth, as there is really limited opportunity for them to do so.
One suspects that it could be sovereign wealth funds, or extremely wealthy individuals who are able to make the Swiss currency and gold price move in this way.
The money is not being attracted by high interest rates! It is being repelled by fear of Governments who are going bankrupt and trying to get hold of anyone with wealth.
There is no taxation on the income from Gold and limited taxation on the minute interest rates being paid for Swiss Government bonds.
I suspect the currency is being bought to escape domestic taxation, and governments who will revert to stealing from anyone with money when they cannot buy a new pair of trainers from the tax revenues!
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probably people shorting eur/chf pairs causing such large movements, seems to be unwinding now
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FAQ
to keep 1K of chf on my last prepaid currency card which was put on at a rate of 1.82chf. We might be doing a club holiday to Arosa next easter ( i didnt choose the location ). I will need more chf, do i top up now, wait or what? by the way i cant find chf for 1.25 today, the best i can get is 1.18, where do you get these rates? ta 
