Swiss franc strengthened against the euro and other currencies after the decision of the Swiss Central Bank, which announced that it ceases to defend its currency and releases its course. , photo:
It’s surprising decision, given that the bank is continuously sustain their determination to defend the currency.
High franc, the higher payments for borrowers, but also definitely bad news for our economy, because the decline in household income, repaying loans in Swiss francs may affect the consumption in the coming months in our country.
Poles francs in debt to pay higher installments
What next for the franc exchange rate?
– certainly the exchange rate will fluctuate, because the Swiss central bank set him free, and investors are looking for such a level that reflects, at least short-term balance of the market. And you can expect that it will last for a while. For now, the franc exchange rate stood at 4.20 – 4.30 zł. – Said in a radio Jedynka Dr. Adam Czerniak, chief economist at Insight policy analysis center.
over the next week things will normalize.
– I do not think it should be mo re than 4.5 zł per franc, but it amusingly vain for borrowers – adds. What was the reason
changes SBC decision on the defense of its currency?
Decision ill
– The official justification was that the recent weakening of the euro, the dollar strengthened and therefore there is no justification for the lower limit of fluctuation of the Swiss euro currency to maintain and defend. But I think that the SBC was not concerned with the reaction of the financial markets, because this is what we saw on Thursday, can be compared only to break the dam on the river. Just suddenly a lot of capital began to flow into Switzerland and the capital was partially sucked out of emerging markets weakened gold forint weakened, as the Romanian currency depreciated – lists the expert.
In his opinion, the bank’s decision was ill.
– I have a feeling that this is a decision a little ill. If you have at least a partial exchang e-rate peg, then if we want to move to a floating exchange rate, which allow investors to independently form the exchange rate, it does not do that to rapidly and surprise. This is done gradually: in the beginning allowed some fluctuation band, or it is said that every day can weaken or strengthen the currency, eg. By 1-2 percent. And then it goes to strengthen the currency for much longer, so do not engage in speculative community investors, there is no such fluctuations, and thus firms and households are better able to adapt to it – says guest Ones.
Now, however, the decision already SBC can not withdraw because he would lose credibility.
– As I have already made such a decision, you should not rely on the fact that after the intense reaction of the financial markets will defend another level of the exchange rate. Until now there is no return – says Dr. Adam Czerniak.
The problem for frankowiczów
Frank gone up i n one day by 17 per cent., at the same time, it must be emphasized that in Switzerland, the central bank cut interest rates by half a point, it means that this The basic rate for loans decreased a little. Does it compensate?
– The whole is unlikely to compensate, but depending on the size of the loan that remains to be paid and the time that you have to pay it back, the increase in loan installments will be from a few to several percent – explains the expert.
And it will be painful for the more than 500,000 people who have taken out loans in that currency.
– However, from the point of view of the entire economy rather not expect very serious consequences. These people are obviously less to spend on consumption, because less money left in their pockets, while the entire pace of consumption has fallen by more than 0.1 percentage point.
But about what level of stop investors decide franc abroad. For the euro-franc our central bank does not have any effect. A speculative community
investors now look to Switzerland, still in their agenda is oil, and more recently, gold, which is more expensive.
But keep in mind that the key currency in economic terms is the euro and the zloty against the euro, and this was not such a weakened its powerful.
KNF calms
– The current situation on the financial market does not substantially increase systemic risk. Our analysis shows that if there was a depreciation of the Polish zloty against the Swiss franc by 30 per cent., Ie the exchange rate would amount to approx. 4.5 zł, the Polish banking sector is able to absorb these changes, what is more, even at 50 percent. In the case of households that have contracted loans in Swiss francs situation is similar. Exchange rate fluctuations are somewhat offset by low interest rates. Therefore, the loans in Swiss francs will not be significantly changed – gives Maciej Krzysztoszek t he Financial Supervision Commission.
According to the state in 2013 franc loans account for 32 percent. All mortgage loans in Poland.
worst would now take a hasty decision, because they usually lose – warns Dr. Adam Czerniak.
Specialist is also of the opinion that today’s decision of the bank in Switzerland may have an impact on our MPC, which next month, may decide to lower interest rates. Rate cut could reach up to half a percentage point.
Threatening be promises of politicians
– The turmoil in the financial markets are, as far as banks are well capitalized and should have no special problems due to the increase in the cost of servicing loans in Swiss francs, while the large This unknown behavior of politicians. Part may be inclined to make promises to the voters for funding from the state loans in Swiss francs, and that all we have lost – sums guest Ones.
Bank wants to influence the ec onomy through interest rates
SBC decision surprised everyone and in this case there is already a lot of interpretation.
– It seems that the Swiss bank has decided to change the instruments of monetary policy in the sense that less focus on defending the exchange rate against the euro, and more impact on the economy through interest rates. It is worth noting that the decision to abandon the defense of the euro / franc accompanied by a decision to cut the interest rates, which are now more negative than they were – says Grzegorz Maliszewski, chief economist at Bank Millennium, who was a guest on the air
PR 24. For borrowers the good news is also the fact that the Swiss National Bank does not rule out intervention if the franc is too strong.
– If the franc to be too aggressive strengthened against a basket of currencies, the Swiss central bank also has to intervene. It seems to me that after this vortex market gradually calm d own and there is a chance to reduce the exchange rate against the euro and gold. We may be heading for a four gold as one of the Swiss franc, but it will be quite a slow process – or about PR guy
24. Thursday fluctuations, ie the strengthening of the Swiss franc against other currencies, have no connection with the situation in Poland. Therefore, there are no anticipated foreign exchange interventions, they also do not yield any result – emphasizes economist.
– What is happening is the result of external turbulence therefore NBP actions, causes of changes in the market and the weakening of the zloty would not remove. Actions and interventions would have occurred if he simply ineffective – says Grzegorz Maliszewski.
How to swing
currency pair gold / franc, like the euro / franc soared up and fell. With 3.5 zł in the morning (15.01) the currency Helvetii leapt to 5 zł and 19 cents in the morning, a few hours later to stabilize (though it’s a big word in these circumstances) in the vicinity of 4.15.
Financial Supervisory Commission and the Polish National Bank assure that the Polish financial sector cope with the weakening of the Swiss franc.
Christopher Rzyman, Sylvia Zadrożna, Elizabeth Szczerbak, Grazyna Raszkowska
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