Swiss move causes FX chaos

The Swiss Government have decided to delink the Swiss Franc from the Euro, causing a massive upward revaluation of the Swiss currency that gained over 30 % on this action. The move took the market totally by surprise, ahead of possible moves by the European Central bank to reduce the Euro value by quantitative easing and give a well needed injection into the health of the Eurozone economy. The Swiss, also cut the interest rate that banks receive by depositing funds at the Swiss central bank to a negative rate, -0.75%, a move designed to encourage banks to do something creative with their money from an economic point of view, rather than just leave it on a Central Bank account. Doing so now produces a negative return.

Alpari a  Foreign Exchange Broker currently sponsoring West Ham football team to the tune of £3 million for a three year deal, has been caught out by the appreciation of the swiss franc and filed for insolvency, with clients unable to meet substantial losses through the rapid swiss franc, that now becomes the broker's responsibility.