Pettis: The Swiss in Focus

Among other things in Michael Pettis’s latest, this on the Swiss situation:

The Swiss have clearly made their decision.  They do not want any more foreign capital inflow and are trying to eliminate or at least reduce it by capping the rise in the Swiss franc.  It probably won’t work.  I guess now by having converted the currency into a one-way bet I assume that we are going to see massive speculative inflows into the Swiss franc on expectations that inflows will eventually force the SNB to revalue.

via China Financial Markets » The euro once again.

I agree entirely.


  1. I'm not sure I get it. We appear to be in a deflationary environment and the buyers of CHF appear to be doing it for investment purposes, not to spend it in Switzerland. How does that translate into inflationary presure high enough to make the Swiss back off their printing press? Plus at 120 the Franc is 30% stronger than it was a couple years ago which is a really nice inflation buffer. Maybe I'm missing something but it seems like it'd take an aweful lot of pressure to create a level of inflation that would back the Swiss off their stance.


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