ECB and Inflation

[Zanza]

The Swiss dropped their Euro exchange rate limit this morning and now CHF is moving a lot. What's the thinking there? Are they anticipating the ECB?

The Euro has been losing value against all currencies, especially the dollar, for several months now. And because of the different economic development and monetary policy in the US and the Eurozone, this trend will likely continue. The Swiss had to build hundreds of billions in assets over the last years to keep the value of the Franc at a stable level compared to the Euro. These assets were becoming more and more risky and had lost a lot of value already. So it was now with high losses or later with even higher losses.

Their tourism and export industries will be hurt. A lot. Tourism becomes prohibitively expensive for all their neighbors. About 60% of their exports go to the Eurozone, so raising prices by 20% across the board will hurt competitiveness.

They already have a deflation and this is like to accelerate. The main interest rate of the SNB is already at -0.75%, so there is also little they can do to fire up inflation.

[Zanza]

This must suck for those Eastern Europeans that still have mortgages denominated in CHF. Their own currencies are probably roughly in sync with the Euro, so they might have seen their mortgage growing by 20% in a day.

[CountDeMoney]

I don't care about the resale value of my bonds because I always hold until maturity.

If only Ed had done this.

[MadImmortalMan]

This must suck for those Eastern Europeans that still have mortgages denominated in CHF. Their own currencies are probably roughly in sync with the Euro, so they might have seen their mortgage growing by 20% in a day.

Oh damn. A lot of people are probably pissed off right now.

[Ed Anger]

I'm now losing value on my Normandy holdings. Plz fix Euro.

FIX NOW.

9000 dollars in lost value. 

18000 now. 

Also, I laughed Seedy.

[Liep]

The Danish krone seems to be next in line after the Swiss. Apparently the national bank is under "attack" from foreign investors forcing them to buy foreign assets to keep the krone level to the euro.

[MadImmortalMan]

Is this going to be a domino effect? I mean, none of the small currencies can hope to have the firepower to keep parity with the euro for long.

[Sheilbh]

Some Danesplaining:
https://ello.co/guan/post/2vJyUspQhHPHopAetAnHiw

[MadImmortalMan]

splaining

You're too good for that. 

[Sheilbh]

I'm really not

[Jacob]

Some Danesplaining:
https://ello.co/guan/post/2vJyUspQhHPHopAetAnHiw

Looks like it's good for Danish house owners, as they can refinance their mortgages at very low rates.

[Sheilbh]

UK government just sold bonds at negative interest

[Liep]

UK government just sold bonds at negative interest

We've been doing that for a while, what's new here is that banks are starting to charge customers negative interests on bank accounts. OH HELLS NO, WHERE'S MY MATTRESS?!

[Sheilbh]

I don't really understand how it's possible. Some Euro-companies have issued negative interest rate debt too

[celedhring]

Our inflation-tied bonds are inching towards negative yield too. Deflation ahoy!