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The Swiss central bank stunned global markets on Thursday by abandoning a crucial part of its three-year effort to hold down the value of its national currency against the ever-weakening euro.
The country had been trying to cap the value of its currency, the franc, as nervous investors fled the market tumult and sought the relative safety of Switzerland. But in the face of a steep decline in the euro, the plan proved too risky and too costly to continue.
The abrupt move sent the value of the Swiss franc soaring, as the country’s stocks broadly plummeted. Exporters, in particular, got slammed, over fears that the rising currency would weigh on profit.
“We can only guess at what was in their minds,” Carl Weinberg, chief global economist at High Frequency Economics, said of the Swiss central bank’s move. “Maybe they are afraid that the euro is coming on some hard times, and they didn’t want to be tied to a sinking ship.”
As Directors and Shareholders we would like to offer our sincerest apologies for this devastating turn of events, and to thank you for being such a supportive group.
I like how the Swiss did not first inform the IMF nor the BIS of their gambit to de-peg from the €uro