Swiss Currency Shock Reverberates One Year After Cap Abandoned
- It's the anniversary of Switzerland scrapping euro-franc limit
- Pair's bid-ask spread widest since 2009 as liquidity dries up
Swiss Franc Shock One Year On
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A year after Switzerland shocked investors by ditching its exchange-rate cap and allowing the franc to strengthen against the euro, the effects of its decision are still reverberating through global currency markets.
Investors say the incident damaged confidence in automated dealing systems and trust in central banks’ willingness to stand behind their exchange rates -- crucial now as pressure mounts on currencies that are pegged to others such as Saudi Arabia’s. And it was an early warning of the liquidity drought that would go on to exacerbate this week’s flash crash in South Africa’s rand.