Tuesday, March 28, 2023

That could happen in 2023 with the euro-franc exchange rate

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2022 was not only turbulent on the stock and bond exchanges. There were also major price movements on the foreign exchange market.

When it was (physically) introduced at the beginning of 2002, the euro still cost 1.48 francs and in the years that followed it rose to over 1.60 francs. Temporarily passati: In mid-2022, the euro exchange rate fell below parity and marked a record low of CHF 0.9405 at the end of September. Only in January 2015, after the Swiss National Bank (SNB) lifted the minimum exchange rate, did the euro trade even lower. At that time, however, the common currency had quickly recovered above parity.

An important reason for the weakness of the euro is the high inflation differential between Switzerland and the euro zone. While inflation in Germany was 3 percent in November, prices in the euro area have recently risen by 10 percent. In addition, the Swiss National Bank (SNB) raised interest rates for the first time in June and have doubled them twice since then. The ECB followed in July. But economists accuse it of being too hesitant to combat inflation. In addition, the euro is suffering from the high level of debt in individual member countries.

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