Photo: jessicafm via flickr
The euro has exhibited notable resilience amid the persistent debt crisis.What’s propping up the beleaguered currency?
The Swissie, according to Cumberland Advisors’ David Kotok. That’s the Swiss franc.
The Swiss National Bank is pegging it to the euro, “regardless of the short-term cost,” he notes.
“…the massive expansion of the SNB balance sheet and the commitment to the peg now combine to make the Swiss 10-yr bond the European benchmark. Switzerland is considered the highest-quality, most truly AAA-rated credit in Europe. Switzerland is supposed to be a neutral country, but it clearly has linked its monetary path with that of the eurozone.”
Earlier today, the SNB reiterated its commitment to maintain a minimum exchange rate of €1.20 per Swiss franc.
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