The Swiss central bank has announced that it has bought Australian dollars as part of a diversification of its foreign exchange reserves. The interventions that had become necessary in May and June to curb the rise of the Swiss franc against the euro had led to purchases of 120 billion euros, part of which had then been converted into A$.
This operation may have helped to strengthen the Australian dollar, but the exchange rate between the latter and the Swiss franc has long since acquired its own character: some consider it a key change to sniff out the state of the world economy. On the one hand we have the Swiss currency, the safe haven par excellence, the port where capital arrives when the scaffolding of the world creaks and anxiety about geopolitical upheaval increases. On the other hand we have the Australian dollar: the currency of a country with a chronic current account deficit (external debt exceeds 60% of GDP). However, the currency is defended by capital inflows towards a country with immense mineral, agricultural and landscape resources. The Australian dollar is therefore strong when the rest of the world economy is buoyant, while the franc is strong when the rest of the world economy is struggling. The franc has recently strengthened significantly against the A$ in 2009 (Great Recession) and again in 2011 (acute phase of the sovereign debt crisis). Now it has returned to 'normal' levels, as they prevailed before the great crisis. A good wish?
