The Swiss franc gained ground in one day. Why did such a collapse happen? Let’s have a look at the chronology of events:
- The financial and economic crisis of 2008 caused the demand for the Swiss franc as a safe-haven currency to rise sharply.
- The Swiss franc exchange rate appreciated to the dollar and the euro over the years.
- Foreign goods became cheaper in Switzerland, but home-made goods became more expensive. This caused Swiss business to suffer.
- In 2011, the Swiss Bank abandoned its floating exchange rate policy and pegged the franc to the euro at a rate of 1,2000. Such unnatural slowing down of the exchange rate was contrary to the objective economic process and did not develop a lasting existence.
On January, 15, 2015, the Swiss Bank unexpectedly abandoned its previous policy of holding the exchange rate, followed by a collapse. As a result of this collapse some brokerage and investment companies went bankrupt.
What conclusion can private traders and investors draw from these events?
- Experienced traders can make a big profit by using news from central banks. The ATAS trading platform can help with volume analysis and trading in currency futures.
- These events show investors the importance of diversification and investment in currencies of different countries. Since extraordinary things can happen even to stable currencies like the Swiss franc.
