Financial analysts, traders and hedge fund managers are betting on a renewed plunge in the Euro against the Swiss Franc, which is increasingly seen as a safe haven currency. Switzerland’s finances are stable and the country has relatively little debt.

During the week of 25 October 2010 the Euro was trading at CHF 1.36 up from a month previously when the Euro hit a bottom of CHF 1.28 in the waves following the crisis of Greece’s bailout.

Since April 2010 the Swiss National Bank has intervened massively to try to stem the rise of the Swiss Franc and has succeeded in pushing it up roughly 7% from its low last month against the Euro.

In mid-August, the Swiss Central Bank reported losses of nearly CHF 20 billion from frenzied purchases of Euros in an attempt to stem the Euro’s fall against the Swiss Franc.

Switzerland currently has the majority of its reserves in Euros, which is troubling Swiss leaders and reducing the maneuvering ability of the Central Bank.

The Swiss Cantral Bank is trying vainly to brake the rise of its currency out of fears of a negative impact on its ability to export.

But experience has shown that central banks do not ultimately succeed in countering the tide of informed global forex trading. Thus did George Soros make over $1 billion betting on the fall of Sterling when the UK government was intervening massively to prop it up. At that time, twenty years ago, the volume of forex trading was a fraction of the $ 4 trillion that is traded daily.

Because of the serious over-indebtedness of Euro countries, analysts and traders are expecting a further plunge of the Euro against the Swiss Franc in December expected to settle at a rate of CHF 1.20 – 1.21 to the Euro.

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