im Falle dass, jetzt noch in Englisch.............

verfasst von Emerald, 06.12.2004, 08:58

-->Reasons why the Swiss Franc might tend toward depreciation in 2005.
Outlook upon the year 2005



Forecasts made at year-end do not necessarily require to be based on an in-depth analysis. Above all, this applies to cases where, in the past, the market players had obviously committed gross exaggerations. We are dealing with and speaking of the pampered Swiss Franc.

During the past year, many occurrences have favoured time and again the Franc, known by its nickname"Swissie" to currency traders. Early in 2004, the questionable invasion of Iraq by Allied troops was alleged to cause the Franc's appreciation, followed by capital flight from the ailing Dollar into the Franc as safe haven, which resulted in the Dollar's 10-year low in early December 2004.

The continuously rising exorbitant prices of raw materials further contributed to the trend to acquire Swiss Francs for hedging against unexpected depreciations of local currencies. In the course of 2004, many international speculators hedged their soft-currency positions against Swiss Francs. At long last, even the Euro and, intermittently, the British Pound got caught in this whirlpool.

Toward year-end, these exaggerations seem to calm down. Having stabilized in the meantime, the oil price probably tends to drop further. The U.S. economy is ahead of the European countries by several months, whereas there are only subdued prognostics regarding the economic outlook of China, Japan and Europe. But these developments alone would not justify a warning issued on our part regarding the Franc's prospective depreciation.

As regards the outlook on currency matters, we feel more concerned by Switzerland's muddled behaviour both in domestic and foreign politics. While a vote is envisaged to be held in 2005 regarding the association with the so-called Schengen Treaty, influential circles are already mounting vicious attacks against it, contrary to sound judgement. Switzerland's voting"No" on the Schengen Treaty might undoubtedly entail far-reaching consequences. However, a vote rejecting the Treaty on Labour Mobility with the enlarged community of EU states would even more seriously weaken the Swiss Franc. The fact cannot be excluded that, following rejection of the two aforesaid treaties, the European Union might exclude Switzerland from the Bilateral Treaties II on the grounds that the Swiss follow a policy of discriminating certain persons.

At present, we deem it probable that a plebiscite by referendum brought about by populistic pressures
would result in rejecting both voting proposals. If that happens, Switzerland's economy is very likely to suffer extremely serious setbacks. The still unsolved problems connected with safeguarding the bank and customer secrecy might be further aggravated in such a situation, impairing quickly the existing defensive mechanisms.

This is why we feel obliged to caution, as early as now, against excessive investments in Swiss Francs. It might really happen that, during the coming years, losses will precisely accrue with assets denominated in Swiss Francs.

But we are pleased to end our reflections about the Swiss Franc with our heartfelt wishes for a happy and prosperous New Year.


Zug, 6 December 2004

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• im Falle dass, jetzt noch in Englisch............. - Emerald, 06.12.2004, 08:58