The Swiss franc is conventionally abbreviated as CHF. What kind of currency in question, let's try to figure it out. CHF (Swiss Franc) is an officially recognized currency in Switzerland, the popularity of which is due to the powerful banking system of the state. Frank is actively used in international banking calculations, belongs to the category of assets in international currency markets and belongs to the category of leading monetary units in the world. The importance of the currency is growing significantly during periods of economic crisis. Minimal exchange rate fluctuations make the monetary unit an excellent alternative to the main world currency, the dollar.
General information
Almost everyone knows the Swiss franc, or CHF, what kind of currency, as it belongs to the category of freely convertible currency units in the world. In international calculations, the share of the franc is slightly higher than 10%. The volume of gold and foreign exchange reserves in CHF corresponds to only 0.1%. The monetary unit is actively used in conducting deposit operations, and Switzerland itself is the owner of one of the highest credit ratings in the world. Control over the issue of currency is carried out by the state bank of the country. He is in state power, and one of his dominant tasks is to ensure a stable course. Considering the question of what CHF is, what kind of currency it can be said that the most common denominations have a face value of 10, 20, 50, 100 and 1000 francs. Coins of 1, 2, and 5 francs, as well as 5, 10, 20, and 50 centimes, are common in circulation. One franc is equivalent to 100 centimes.
Characteristics of the currency
The Swiss national currency is notable for its low interest rates. Currency volatility increases in case of important monetary and political events in Europe. In the last decade, a significant weakening of the currency can be observed. The price of the Swiss franc in the configuration of the exchange rate with the euro has a downward trend. If in the period until 2006 the average cost of the franc corresponded to 1.5 euros, then in 2011 it was possible to observe a price of 1.1 euros. A significant blow to the reputation of the currency was dealt in 2010, when it was decided to abandon providing the monetary unit with 40% gold and currency reserves.
Franc in the foreign exchange market
Currency (Swiss francs) is actively used as a trading tool on the international Forex market. It is perfect for implementing a strategy that is characterized by minimal risks, known among traders as Carry Trade. The monetary unit is effective both for hedging risks and for insuring them. The maximum impact on the movement of quotations with currency has the policy of the state bank and important economic events in the EU. CHF / JPY, EUR / CHF and USD / CHF are the most common currency pairs in the foreign exchange market. They account for about 5% of all Forex operations.
Swiss Currency History
The Swiss franc was introduced in 1850. In the country at that time there was no such enterprise as a mint. Coinage was made by banks and private enterprises. Own funds were issued not only by financial institutions, but also by small towns and abbeys.
Starting from 1920, a law came into force that the entire currency of the state will have collateral in the format of a gold and foreign exchange reserve (40%). During the existence of the Swiss franc, CHF (the currency of which country it is, we have already discussed above), the devaluation took place only once, in 1936. The fall in the rate was insignificant and did not exceed 30%. A prerequisite for the phenomenon was the economic crisis in the United States. The strengthening of the monetary unit fell during the Second World War, as the state's monetary enterprises did not suffer from military operations. Banks played the role of storage for the gold and foreign exchange reserves of the conflicting countries. Despite the pan-European crisis, at the moment the franc remains a bargaining chip.
The relationship between the franc and the american dollar
Trying to figure out which CHF currency and what affects its movement, it is worth taking into account its relationship with the US dollar. To analyze the situation, you should pay attention to the behavior of the American currency, and its movement in tandem with other currencies of the world. At times when a large investor wants to reduce risks, he directs the flow of capital to Switzerland, which automatically strengthens the exchange rate. Thus, the strengthening of the national monetary unit occurs separately from the development of the economy of the country itself. Switzerland is considered one of the richest countries in the world, and its currency is the most reliable. National banks of the UBS and Credit Suisse categories have the title of the leading financial institutions in the world. Despite the fact that the state of the country's economy is not advertised, each report of the National Bank and any changes in the aspect of the monetary policy of the state always attract the attention of almost all participants in the international currency market.
Features of the country's economy and its impact on the popularity of currencies in the global currency market
It is very important to pay attention to the peculiarities of the Swiss economy when studying a topic related to the Swiss currency, also known by the abbreviation CHF. What kind of currency is this, we considered above, and now we can stop at the banking system. It is characterized by complete confidentiality, which allows tax evasion to be very effective. According to preliminary estimates of world economists, it is possible to weaken the financial mechanism of the state only in one case - if the EU imposes strict sanctions on the state.
The reliability of the state banking system directly affects the reliability of its monetary unit. Features of the country's economy and the impact factor on the currency of the US economy and the EU economy determines the mirror movement of the USD / CHF and EUR / USD pairs. When one of them jumps, the second starts a similar movement, but with a small time delay. The effectiveness of forecasting the movement of currency pairs is due to the stability of the franc on the one hand and the intense movement of the dollar on the other.