How The Run On Europe Came To An End In One Bizarre Looking Chart

In case you haven’t seen it, here’s a chart of the Swiss Franc vs. The Euro, via BofA. It’s incredibly important, as we’ll explain below.


Photo: BofA/ML

In late 2009, the Swiss France really started to surge against the euro, as wary investors, watching the emergence of the European crisis, rushed their cash into uber-safe Switzerland. As the crisis wore on in 2010, the Swiss Franc continued to surge. And then in 2011, the Swiss France went truly parabolic, as the world was consumed by both the Euro crisis and also the US debt ceiling standoff.

Not long after that, Switzerland decided to set a “ceiling” on CHFEUR, as the strength of its own currency was seen as an impediment to stronger exports, or even just people wanting to visit Switzerland. Money continued to rush into Switzerland form Europe, but the Swiss National Bank made sure to keep the Franc from appreciating (essentially by printing a lot of Franc).

But the European crisis is finally fading, and in the circled part we see the Franc weakening to beneath the ceiling. Essentially, the run on the Eurozone, which had precipitated a strong capital rush into Switzerland is reversing. And people are putting more money into Eurozone banks and Euro-denominated assets again.

It’s a very bizarre looking chart, but it tells a big story.

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