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> The Swiss franc is currently pegged 1:1 with USD, having ditched Euro peg almost 5 years ago. It's not.
by dbrgn 7y ago
> The Swiss franc is currently pegged 1:1 with USD, having ditched Euro peg almost 5 years ago.
It's not.
- rolltiide 7y agoThe Swiss central bank actively tries to maintain parity Use whatever word you want to quickly convey that thought to a broad population “Peg” also does that.
- kgwgk 7y agoOver the last four years the USD has moved in the range 0.92-1.03 CHF (a +/- 5.6% interval around the midpoint). The average rate is 0.985, the standard deviation 0.019 (2.0%). Over the last four years the EUR has moved in the range 1.06-1.20 CHF (a +/- 6.0% interval around the midpoint). The average rate is 1.117, the standard deviation 0.034 (3.1%). Even though the exchange with the USD is slightly more stable in this case (it depends on the period and metric chosen) saying that it's pegged is an exaggeration. By the way, the CHF was not pegged to the EUR either. There was a minimum rate set by the SNB at 1.20 but it floated as high as 1.26 in 2013.
- devnulloverflow 7y ago> ... but it floated as high as 1.26 in 2013. Just before they abandoned the peg as too hard to maintian.
- kgwgk 7y agoMaintaining the 1.20 floor (not peg) is not hard when the CHF is weakening against the EUR, the SNB doesn’t need to do anything at all when the exchange rate is moving in the direction they want. They abandoned the floor more that a year and a half later, in January 2015, when the exchange rate was back at 1.20 despite their efforts to keep CHF appreciation under control.
- rolltiide 7y agoI mean I've seen state sponsored pegs that had a greater standard deviation than this non-peg. Thanks for the quantitative response, I just don't find it a productive conversation to what the point was.