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The Swiss Franc Soared by 30%, after abandoning its Cap against the Euro
Kuwait - Kuwait Finance and Investment Company (KFIC) reported that the currency markets during the first quarter was culminated with significant news related to the Eurozone. Where in mid-January the Swiss Central Bank (SNB), decided to scrap its peg of 1.20 Swiss francs per euro.
This movement came as a surprise and had a strong impact on the trading session on that day.The unparalleled impact is considered the firstof its kind in the history of the world's six most-traded currencies. Where the franc exchange rate ascended by 30% against the euro, and 23% against the US dollar. Abandoning the cap against the euro wasn't the only influential decision, as the SNB also enacted reducing the interest rates on deposits to below zero. In order to oblige the capitals to inject liquidity into the market, and rectify the current European economy situation.
In this context, Hamed Abu Saadeh, Manager of Mutadawil FX & Derivatives at Kuwait Finance & Investment Company stated: "The European Central Bank also announced facilitating the quantitative easing. In an intent to purchase 60 billion euros of government bonds. This implementation was officiated in March 2015,and it is expected to end in September 2016."
Abu Saadeh then added: "Such movements were collectively implemented to support the economy overall, and to increase the pressure on reducing the euro'sexchange rate. In order to attract the global market to the European products, and increase its demand.In this regard the euro fell by 11% against the US dollar during the first quarter. Also the declining oil prices helped in rescuing the European economy. In which Texas mix fell by 13% and Brent fell by 8.5% during the same period."
Abu Saadeh then elaborated: "the reforming stepstaken by the Swiss Central Bank and European Central Bank yielded great results in the first quarter of the Eurozone's market. Where the shares of the Eurozone recorded the highest performance in the world's major stockmarkets. In which the German (DAX) indexrose by 22%, andthe index of the French(CAC) rose by 17.8%.
On another note, the decline in the euro currency came along with a riseinthe dollar exchange rate. This in return redirected the foreign investors towards the euro in attempt to reap an appreciation of the currency. Consequently, it imposed stability to the index of (S&P) and (Dow Jones), while the index of the (NASDAQ) increased by 3.48%. TheEast Asianshare also benefited from the rise in the dollar exchange rate. Where China's Shanghai market, recorded an increase of 15.87%.
It is noteworthy that KFIC provides a complete package of Online financial brokerage services. In order to enable clients to trade and manage their portfolios and investments through computers, mobile phones, and tablet devices with ease. Where clients can trade in GCC, Arab, and International equities, and foreign exchange and derivatives; including oil and gold trading.
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© Press Release 2015
