Switzerland’s decision to drop the cap that pegged the Swiss franc to the euro has triggered a currency war, says deVere Group’s James Stanton.
Stanton, who is head of foreign exchange at the independent financial advisor, said that the move has “triggered a flight to safety” and that the current market volatility “will last for weeks”.
“After the SNB had previously affirmed it would defend the EUR/CHF floor, understandably no-one saw what was coming. It was a bolt-out-of-the-blue move that shook the markets to their core,” he said. “The move yesterday heralded the start of a new currency war. Due to the enormity of this tide shift and the scope of volatility it has generated, we expect that turbulence is here to stay for a while yet.”
Stanton added that investors would not be able to shrug off what has happened and that it will take some time for the markets to readjust. He also believes that the move will continue to work out well for the US dollar – typically seen as a safe haven in times of crisis. The Japanese yen could also see a surge.
“As ever, volatility will create clear opportunities and should be a viewed as a chance to rebalance portfolios to mitigate future potential risks,” he said.
