martes, 20 de enero de 2015

martes, enero 20, 2015

Review & Outlook

Blood on the Forex Floor

The Swiss currency shock leaves losses everywhere.

Jan. 16, 2015 6:47 p.m. ET
 
Never trust a central banker, not even a Swiss one. The sudden surge in the value of Zurich’s currency resulted in a second day of financial-market carnage on Friday, with banks, currency brokers and their customers suffering hundreds of millions of dollars in foreign-exchange losses—and there may be more bloodletting to come.

The Swiss National Bank lifted the franc’s peg to the euro on Thursday as the eurozone’s devaluation exertions made the policy increasingly costly to maintain, catching global markets by surprise. The largest retail currency broker in the U.S. and Asia, FXCM, reached a deal for a capital infusion of $300 million in cash from Jefferies amid the Swiss franc rally, while traders at Citigroup , Deutsche Bank and Barclays reportedly absorbed major hits in portfolios exposed to the franc.

    Getty Images

Meantime, a New Zealand brokage was ruined overnight and another U.K. house went into insolvency. Financial regulators are canvassing the damage, but the full measure of the shock is likely hidden on company balance sheets for now. First quarter earnings reports could be ugly.

All this is the inevitable consequence of the extraordinary volatility in world currency markets, especially in what economist Robert Mundell once called the most important price in the world—the dollar-euro exchange rate. The devaluation agenda among central banks hoping to grow via exports is shaking the global monetary system, with sometimes nasty surprises.

The lesson of Friday’s forex rout is the familiar one to prepare for the worst. The more disquieting worry is that markets haven’t yet seen the worst.

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