Chapter 930 The Fourth Blow

  The implementation of QE in the euro zone hit the foreign exchange market hard, and the exchange rate of the euro against the dollar plummeted. This situation has made American hedge funds, which are still immersed in the big wins, complain.

At present, there are two paths in front of them. Continue to operate in the European stock market and national bond market. It is obvious that these markets will have a certain amount of income, but whether this part of the income can offset the losses caused by foreign exchange fluctuations remains to be seen. Unknown; the other way is to admit defeat and leave now.

   But savvy hedge funds soon discovered that, in fact, they were not without a third option.

This matter still needs to be talked about three years ago, when the financial crisis in the United States swept the world, and it evolved into a debt crisis in Europe. Buy, which also includes the Swiss franc.

  Speaking of Switzerland, most people only know about its banking and watch industries. But in fact, Switzerland is one of the most stable economies in the world. Its long-term policy, safe financial system and bank secrecy system make Switzerland successfully rank among the richest countries in the world.

  In addition to the banking and watch industries, Switzerland's technology, manufacturing, pharmaceutical, chemical, and food industries are among the top in the world.

  Because of the high degree of economic freedom and low tax policy, many multinational companies have set up their headquarters in Switzerland, including Nestle, ABB, Glencore, UBS, Credit Suisse and other world-renowned large companies. At the same time, the headquarters of dozens of world organizations such as the World Health Organization, the International Telecommunication Union, the World Meteorological Organization, and the World Labor Organization are also located in Switzerland.

   This is a country with a highly developed and stable economy.

  The safe-haven funds naturally chose the Swiss franc, because its currency value is strong, and there is no danger of excessive depreciation or appreciation, especially when it is against the US dollar. This created a problem, as money from all over Europe poured into the Swiss franc market, causing a rapid appreciation of the Swiss franc, which hit the Swiss export industry hard.

   But for the Swiss government, this kind of trouble caused by currency appreciation makes them suffer. First of all, it is impossible for them to limit the influx of funds by adjusting the degree of freedom of the economy. After all, this is the foundation of Switzerland; secondly, they cannot ignore the pressure exerted by their export industry on the government. borne by the Swiss export industry.

  After thinking about it, the Swiss government has implemented a measure to limit the exchange rate of the Swiss franc to the euro by 1.2, that is, to force the maximum exchange rate of the euro to the Swiss franc at 1.2 euros to 1 Swiss franc. They balance the inflows and outflows of funds by buying euros and selling Swiss francs in the market. After all, for the Swiss franc, as long as the Swiss government starts printing money, it can have as much as it wants.

   Such a policy has been maintained for three and a half years. Although it is a bit unbelievable, the Swiss government has withstood the pressure of currency appreciation and kept its export industry.

  However, the implementation of the QE policy in Europe this time has resulted in a large amount of speculative funds staying in Europe, which once again constituted a huge test for the Swiss government.

  Hedge funds quickly discovered a third way, which is to exchange the euro with the fixed exchange rate for the Swiss franc, and then exchange it into the US dollar through this market. Because the exchange rate between the euro and the Swiss franc is fixed, no matter how much the euro falls, the value of the euro against the Swiss franc remains at a stable level.

On the other hand, although the value of the Swiss franc against the U.S. dollar has fluctuated slightly, generally speaking, the fluctuations are very small, because the fundamentals of the Swiss domestic economy have not changed much compared to the United States, while the euro zone has not. Its largest trading partner, the degree of mutual economic closeness is completely different.

As a result, the funds of these hedge funds poured into the Swiss foreign exchange market. In just one week, more than 50 billion euros of funds poured into Switzerland. This also means that the Swiss government needs to issue more than 40 billion Swiss francs in new currency. .

This inflow of funds is a good thing in the short term, but if the economic situation in Europe improves and these funds flow back to Europe, it will be equivalent to the Swiss government issuing hundreds of billions of new currency to the country, which may lead to Inflation risk.

  So the market is waiting for the Swiss government's statement.

   Soon, the Swiss government strongly stated that they would do everything possible to maintain the value of the Swiss franc. There is even a senior official who said strongly that we will sell as many Swiss francs as there are euros in the market.

  As soon as these words came out, the entire market was relieved.

  The depreciation of a country's currency means that the country's currency has been attacked by short-selling, and its central bank can only maintain the balance of the exchange rate by short-selling foreign exchange reserves and buying its own currency. This process requires constant consumption of foreign exchange reserves, and once the foreign exchange reserves are exhausted, it means that the country's currency has to depreciate.

   But for a country's currency appreciation, it is a completely different situation. That is, hot money continuously buys the currency of this country, and sells related foreign exchange reserve currencies such as US dollars and euros to this country. If the country's currency exchange rate is to be stable, the country's central bank needs to sell its currency to hot money and buy related foreign exchange reserves. For this country, the national currency is just a matter of starting the money printing machine. It can be said that everything is available, and there is no problem with as much as you want.

  Therefore, with the endorsement of the Swiss government, the entire market is full of confidence in the Swiss franc.

  Hedge funds from the United States completely put a restless heart back into their stomachs. They found a way to get out of QE safely, which is to borrow the currency of the Swiss franc.

   Simply put, the euros are converted into Swiss francs, and then the Swiss francs are converted into dollars. In doing so, they will be able to wipe out losses in the euro-dollar decline.

  Of course, some people will say that there will still be arbitrage funds in the exchange rate market, which will smooth out the exchange rate differences between the three currencies. However, arbitrage funds can only be implemented when capital can flow freely. Now the Swiss government is equivalent to putting a shackle on the euro and the Swiss franc, so there is no way for arbitrage funds to even out the euro against the US dollar and the Swiss franc The exchange rate difference against the dollar.

The exchange rate between the euro and the U.S. dollar is generally determined by the economic situation in the euro zone and the U.S. economy, while the exchange rate between the Swiss franc and the U.S. dollar is determined by the economic situation in Switzerland and the U.S. economy, so the range of change between the two It's not the same thing at all. Moreover, for the euro-dollar market, the Swiss franc-dollar foreign exchange market is much smaller in terms of scale and trading volume, and there is no comparison at all.

   Now hedge funds can safely and boldly hold the euro in their hands. In this way, they not only enjoy the growth of the European capital market brought about by QE, but also avoid the cost of the exchange rate drop caused by the exchange of the euro to the dollar, which can be said to kill two birds with one stone.

  God cares for them so much, this is the voice of many of them.

   "My God, is the Swiss government stupid? How can they make such a statement?"

After seeing the Swiss government's position, Jiang Shan couldn't believe his eyes, and complained to Zhong Shi with a newspaper, "Do they know what they are doing? In this way, the speculative funds in the whole of Europe may be They will all flock to Switzerland!"

"These hedge funds can do whatever they want in Europe as long as they have a forward contract with a broker that locks in Swiss francs and euros. They only need to bear a little foreign exchange risk in Swiss francs and dollars, and they can make unimaginable amounts. God. , this business is really comfortable!"

  Jiangshan didn't know the most critical step of the whole matter, but what he knew was that there would be a big storm sweeping the world in the future, so he boldly invested all his wealth in gold futures. But now it seems that Switzerland has done this, almost abruptly suppressing the influence of QE in Europe.

  Of course, because of the difference in economic aggregates, the impact of the two news on the market is not the same. Overall, the price of gold has risen. That is to say, Jiangshan has made money so far.

   "Insatiable!"

  Zhong Shi smiled helplessly, and raised his **** at Jiang Shan, "It's as if you're losing money now!"

  Jiang Shan scratched his head in embarrassment after hearing this.

   "By the way, wouldn't it be more attractive for hot money to flow into Switzerland if they did this?"

  After thinking about it, Jiang Shan was a little confused, "In this case, wouldn't Switzerland need to issue more Swiss francs? If one day these money flowed into Switzerland, wouldn't it cause serious inflation?"

  Indeed, as Jiang Shan thought, the entire market will stare at the Swiss franc to avoid risks.

  “One is a market with potential growth, and the other is a market with slowing economic growth due to currency value issues. If it were you, which one would you choose?”

   "Europe, of course!"

  Jiangshan replied without thinking, "So that's the case, I understand!"

  According to the current situation in Europe, after the implementation of QE, within half a year or even a year, the economy of the euro zone will have a considerable improvement. In this case, whether it is investing in their stock market or the bond market, there is a lot to do. But for the Swiss market, I am afraid there will be no such yield.

  So people with a little brain will think about holding euros. Anyway, the exchange rate between Swiss francs and euros is fixed there, and they can’t run away.

   "So they're still holding euros, right?"

  Jiangshan continued, "Maybe they will use some forwards to guarantee that they can be converted into Swiss francs, maybe there will be no such contract. But they will always keep their money in Europe, right?"

   "Yes, that's exactly it!"

   Seeing them fall into the trap, Zhong Shi was overjoyed, but his face was expressionless, and he just said coldly, "They are still too young! Too childish!"

   Thanks to the book friend Wolf Wandering North America for voting monthly! Thanks to the book friends who want to become a top student for their rewards! This summer is so hot and mentally exhausting, I have no choice but to continue, thank you for your support~

  

  

  (end of this chapter)