It was a hefty reaction today at the stock echanges worldwide and
even currency exchange markets had a big shock when the Swiss
National Bank declared to drop the Euro floor. From the magic
1.20 CHF line, the Euro noted at lowermost 0.82 CHF.

At the current time, the Euro is slightly above 1 CHF (1.0283 – 14:00 MET). But the drop also affected the US-Dollar and the british pound. All currencies have lost weight against the swiss franc. The meridian is 13 percent. It was no question that the floor had to be discarded, the SNB president stated this noon, but the instant drop has hit the markets hard. So has the SMI lost 9 percent and it’s covalent market, the SPI also lost 9 percent to current stand. The hardest giveaway struck exporting markets such as cemical industries (Holcim, Transocean) and the watch industry (Swatch group), while local industries that serve internal markets mainly have lost only 2% of their day starting value.

So what about the markets today? Mostly there are panic actions responsible for this huge drop today. Analysts expect that the market will soon stabilize. For exporting companies in Switzerland, there may be hard times ahead but the SNB president clearly stated, that the companies had enough time to acommodate to the future plans and save enough finacial power to buffer this drop. Those companies who speculated with the floor until the very end are now the big loosers.

Since the shops around the swiss border now expect massive purchase waves, the shops have increased their personnel to be able to serve the masses of people. But also the swiss border guards will have to do more work and inspect people not to exceed the legal import amounts on different wares.

The savings accounts of banks holding back money has ben set to -0.75% interest rate from 0.25% which means that the banks not willing to give out credits will have to pay back interest on their savings. This might be the counterpart to dampen the franc skyrocketing as companies may expect easier credit acquirements the upcoming days (the banks are for sure not willing to pay big interest amounts on their savings so they issue it for higher interest rates to the customer.) All in all it may come to the point where the interest rates for credits may significantly drop as there’s lots of money to bring among the people and companies. With high interest rates, this might not work.

The following graphs may underline the impact of the SNB’s announcement to drop the currency floor. The Announcement was made at 10:47 MET. All pictures are copyright of www.finanzen.ch

Just a minute later, the Euro lost value to 0.7992 CHF!

Not less important for the world economy, the US-Dollar, which noted at 0.7151 CHF!

Even the british currency has lost weight to the CHF – 1.1729 CHF being the
lowest (but back to 1.33 CHF when the realtime chart started working)

  Oh and the swiss market index had it’s lowest index at 7.932 points (12:35 MET)

Click on the images to enlarge them for better viewing