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Should one be worried about the Euro?

As you can see, the Euro is undergoing some loss of value compared to the Swiss Franc.
So is the Dollar and other currencies aswell.
But what makes the Swiss Franc so extremely strong compared to the other currencies?
Is it Switzerland with it’s well-known banks or some other factor?

Recently, the European Central Bank has risen the base rate to make the Euro more stable and gain more value. This happened at the beginning of July.
Just two weeks later it seems as if the european currency tries to probe new record depths against the Swiss Franc and thus making the Swiss National Bank nervous.

When I started to follow the Euro rate day by day / minute by minute by writing a VBA macro,
that fetches the curency rates every minute and writing them to a file, I also noticed the
value loss of the Euro to the Swiss franc…
(I spotted an error (100 Yen are of course 1,027 CHF!) and thus have updated my tool already!)
Click to enlarge the picture

Of course one could say: Hey, why aren’t you guys happy about the weak Euro?

Sure, the swiss people could in fact profit from the deep Euro but the backside of this is that also Switzerland relies on Exporting goods to Europe thus making swiss goods more expensive and also less competetive against goods from i.e. Asia. That’s why Switzerland is considering plans to either bind the Swiss Franc to the Euro meaning that when the Euro is loosing value against currencies like the Yen or the british Pound, so does the Swiss Franc. As you can already guess, this idea does not well harm with the swiss people and when these plans got public, there was a great uproar from many people to reconsider such plans.

Indeed the swiss economy has yet fought well in the current world economy crisis and is still presenting good figures but how long can Switzerland still keep it’s good economic image up when the currency gets so darn expensive and thus making goods from Switzerland also very expensive?

I am monitoring the EUR-CHF currency chart with great worries and hope that the downfall will stop soon. Otherwise the trust in the Euro may vanish completely and probably lead to a highly overrated Swiss Franc that could cost lots of jobs…

Other factors that aren’t helping the Euro to gain strength are that Italy recently published their figures of debt which are currently 1800 Billion Euro (thus resulting in 124% of their economical power.) Now you say why all that whining? Greece is 140% of their economical power in debt. But compare the economical power of Italy and Greece. While Greece only makes approx 4% of the euro zone, Italy has a whopping 17% of the cumulative european economic power. Think of what may happen if Italy has to declare bankruptcy!

Spain also has moaned about being highly in debt. Yet it seems as if Spain could step back on costs and reduce debt significantly without the help of Europe.

The biggest debitor still might be the USA as their debt has already reached 14.3 trillion (14.300.000.000.000) dollar in debt! They are currently discussing about raising the debt line once again. However a clear line ain’t in sight thus probably rendering the USA not being able to cope with all the costs at the beginning of August!

If one is thinking that the world economic crisis is already over, well, think again. The wost is yet to come!

So what do you think? Feel free to post your comments and thoughts…

July 18, 2011 Netspark - 1594 posts - Member since: May 9th, 2011 No Comments »

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