Swiss Franc depreciates its value by saying that
"With immediate effect,
it will no longer tolerate a euro-franc exchange rate
below the minimum rate of 1.20 francs”
and
“is prepared to buy foreign currency in unlimited quantities.”
So what does currency depreciation actually mean for Switzerland?
Now the speculation is everywhere
be it
in commodity like gold , silver , oil
and also stable currency like Swiss Franc and Japanese Yen.
For commodities' prices ,
many will not be affected like the currency appreciation.
When the currency of one country appreciates,
the exporters will suffer
as the money they will get
from selling the same amount will decrease significantly.
This will , of course , affect the GDP of the country
as the export value is the income of the country in GDP calculation
meaning that
the country will not be able to compete with other countries equally.
Therefore, in order to protect its homegrown business,
some government may have to intervene to protect their own currency
from appreciating too much
resulting from the speculation of hedge funds.
Swiss Government is the first to take action
amidst this Europe Debt Crises.
Nobody knows exactly how the problem will end
as the debts are interconnected.
But the devaluation of the currency is
one tool for the governments to implement
that was what happened to third world countries
when they had their own crises.
But the concept of too big to fail cannot be implemented forever.
Sometimes one has to fail in order to be reborn again.
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