Hedge Funds’ Opinions on Swiss Franc Ceiling

The Swiss National Bank introduced a ceiling of 1.2 exchange rate of Euro to Swiss Franc. Since the move 3 days ago, the Swiss Franc has dropped 10% to the Euro, and the exchange rate is just above 1.2. According to some traders, the latest exchange rate is about 1.2157, indicating that the Swiss National Bank has to offset investors’ demand of the Franc.

Hedge fund managers think that Swiss National Bank is trying to protect large amounts of capital from rushing into Switzerland, but the bank is having a hard time doing so. Some investors hope to make profits from the appreciation of the Swiss Franc by purchasing exotic options. If the Swiss National Bank’s plan does not succeed in the next six months, the investors will make money from the depreciation of the Euro to the Swiss Franc.

Alex Merk, chief investment officer of the Merk Investments, told WSJ that his company is considering purchasing the Swiss Franc in a few weeks. According to Merk, the decision of Swiss national bank on Tuesday put Swiss Franc in a relative weaker position. However, the European debt crisis will lead the investors continue to buy Swiss Franc, making the exchange rate intervention unsuccessful.

Helie d’Hautefort, CEO of Overlay Asset Management, believes that the intervention will work in the short term. But he still does not want to sell Swiss Franc, as he thinks more investors will purchase Swiss Franc because of European debt crisis. He told WSJ that the market would challenge Swiss national bank to see whether the intervention would succeed. Experience told us that such exchange rate regulation cannot last for a long time, he said. Therefore, Overlay is taking a wait-and-see attitude.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!