USD/CHF – a currency pair representing US dollar, expressed in Swiss francs. Major currency pairs are always expressed against the US dollar. This state of affairs was consolidated at the meeting of the International Monetary Conference in Kingston (Jamaica), held in 1976.
Features of the Swiss economy and currency
The USD/CHF currency pair is often called the "Swiss". The Swiss Franc is the last franc still issued in Europe. CHF is an abbreviation of "Confoederatio Helvetica Franc", it represents the economy of a neutral state in the center of Europe. Switzerland has long been a key banking center for customers around the world. Swiss banks are the most desirable places to store money, thanks to the famous reliability and confidentiality.
After the abolition of the gold standard, the value of currencies was determined through trading on a decentralized international currency market, where the exchange rate of a particular currency was determined by the volumes of supply and demand from different financial institutions.
The Swiss franc, which received the reputation of a" protective " asset, was in serious demand among investors and hedgers. After the 2011 crisis, the Swiss national Bank was forced to introduce an exchange "ceiling", limiting the franc's exchange rate to euro at the level of 1.2. After the cancellation of this exchange rate binding to the euro, followed by a sharp daily change in the exchange rate, the national bank went down in history as a "gravedigger" of brokerage offices that suffered multimillion losses on clients who "drained" their deposits.
The central Bank of this country is a joint-stock company with a special status, whose activities are designated by the Constitution as conducting monetary policy in the interests of the country. The Bank is independent, deals with the issue of cash, controls non-cash payment systems, manages Gold and foreign exchange Reserves. The Confederation performs only supervisory functions.
The International Monetary Fund recognizes this currency as a reserve currency, but the total aggregate of countries ' gold and foreign exchange reserves, expressed in franc, does not exceed 0.3% worldwide.
The currency does not have a symbolic designation, the letter value CHF is used in the foreign exchange market. As a means of payment, it is used instead of the national currency in two countries – the microstate of Liechtenstein and the Italian enclave on the territory of Switzerland.
Factors affecting the exchange rate of the currency pair
National stock exchanges have no influence on the exchange rate of the Swiss franc, the currency reacts to external events most actively during European and American session, so it has an inverse correlation with the pair EUR/USD. It reacts to changes in the interest rate and" local " important news (unemployment, GDP, etc.).
Impact of monetary policy
The bank's interest rate strategy is in a negative range, in this regard, the Regulator points to the "overvaluation" of the exchange rate of the national currency and its commitment to taking a set of measures to mitigate it. Often, against this background, the franc exchange rate changes under the influence of "carry trading", a strategy based on extracting profit from the difference in interest rates of the donor countries of currencies in pair. This difference is reflected in swap, which is credited (withdrawn) to the trader's position, "passing" on the next day. Data on the size and conditions of the swap are individual for each Broker.
The dimension of the pair is one character before the comma, after the comma it can be from 4 to five characters, it depends on the type of account and the conditions of the Broker (0.99264).