Source: ForexYard
With the declining trade balance numbers from just a few months back, it was becoming obvious that Switzerland’s ability to export was being severely undermined by a rising franc (CHF). As response to that weakness, among other factors, the Swiss National Bank (SNB) chose to peg the CHF to the EUR at a fixed rate. This month’s trade numbers support that move.
As exports were falling, the Swiss economy was at threat of losing much of the gains made through the recession. The pegging move helped stabilize the value of the Swissie. This stabilization appears to have translated over into a higher trade surplus than was forecast, giving impetus to the idea that pegging the currency was a good move. Moreover, the ZEW reading on the Swiss economy this morning was also much more optimistic than last month, adding weight to this notion.
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