Bruce Krasting

Wednesday FX View: Swiss Antics and OECD Report Dominate

So this am th CHF is at 1.53. They got 2% for their effort. So what? Does this small adjustment have any beneficial impact on the Swiss economy? Not really.

That the Swiss are managing a dirty float of a currency that once had a Reserve status is going to work against them. They might just succeed in they're efforts. I do not buy dirty float currencies as a hedge against anything... When we get back to 1.7 the swiss are going to regret this move. There are a lot of benefits to a strong currency. The argument for a weak currency is just a mask for an uncompetitive economy.

The Curious Case of Missing Intervention

From your excellent description of the conditions for successful intervention can we conclude that the Swiss National Bank decision to go it alone and achieve next to nothing for their effort was (a) a mistake and (b) a poorly executed mistake?

I do not think that the CB's care all that much about a strong Yen. No coordinated intervention there. Same can be said about the Euro. The weak Euro is troubling but the benefits to exports dampens that concern.

The next round of coordinated intervention will take place only when the buck runs into trouble. That is not an issue today, but it will be before this year is over.

You are right. They will be back....

The Swiss Dirty Float: Enlightened Self-Interest or Self-Destruction?

You make the point perfectly. There is only 231bil of gold. There is 14T of treasury bonds outstanding, plus all of the physical notes. You can not 'back' our system with this much gold. that is why they keep it at 42$. It is so small it does not matter.