A new blow of the Swiss franc on the foreign exchange market could be followed as early as Thursday, January 22, when the governors of the European Central Bank will meet, to decide whether and to what extent the ECB will launch the program of the injection of money into the financial system of the eurozone in order to increase liquidity and encourage economic activity.
This program has been considered for months now, but the ECB is reluctant to its starting because consensus among the governors of the central banks of some countries, members of the eurozone is needed.
Bloomberg has recently published the results of a survey in which leading world economists estimate that the ECB President Mario Draghi is likely this week to announce a program of buying government bonds from 550 billion euros.
The Swiss franc has risen by almost 30pc against the euro after the central bank shocked global markets by abandoning its long-standing cap against the euro.
The main opponent of the introduction of this program, until recently, was the governor of the German central bank, which held that such a program would not bring results and that “it has have many side effects”, but later relented in its position on the basis of which many analysts believe that the launch of the program is possible.
If the ECB runs the program, the euro could further weaken relative to other traded currencies, particularly against the US dollar and the Swiss franc, and if launching of the program does not happen, the euro could temporarily strengthen.
Adjustment of the euro against the dollar certainly will follow and that in two to three percent, but its direction will depend on what the decision was made, analysts say.
[cryout-pullquote align=”left|center|right” textalign=”left|center|right” width=”33%”]If the program starts Euro will fall for the two to three percent against the dollar, and if ECB cancels the start of the program, the euro will strengthen to the dollar by the same percentage.
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In relation to the euro against the Swiss franc direction of change would be the same as with the dollar, but it is expected that the percentage change is much higher, due to the fact that their relationship has not been stabilized after last week’s abrupt and sudden jump of franc and the fact that this course continues to change by the second.
The fate of the euro will be accompanied by all the national currencies that have a fixed relationship to the European Common coins.