Infotech

Omicron variant threatens to reignite “currency war”



Posted on Dec 1, 2019 2021 at 17:30Updated Dec 1, 2019 2021 at 18:59

The “currency war”, the race for competitive devaluations, is a latent monetary conflict that has plagued relations between the major countries for more than ten years. It had degenerated into a Sino-American “trade cold war” under Trump and a rise in protectionism. As in all world conflicts, some countries are at the forefront. The central banks that issue safe-haven currencies (Swiss francs, Danish krone, shekel, yen) are thus once again on alert. With the risk of the new Omicron variant, the upward pressures on their currencies began to manifest.

At the start of the Covid pandemic, the yen jumped 6.5% until early March 2020. The other major safe haven currency, the Swiss franc, continued to rise until the end of April and is today at a higher level. Consequently, the Swiss National Bank (SNB) intervenes again to sell francs against euros. The European currency lost 3.6% to 1.0430 Swiss francs this year. It is even approaching parity. The euro has not fallen below this level since January 15, 2015. The SNB then abandoned the defense of the floor rate of 1.20 Swiss francs per euro, and the European currency had plunged to 0.85 Swiss francs.

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