วันอังคารที่ 6 กันยายน พ.ศ. 2554

Currency war ??? ( swiss franc)


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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