PAPER currencies have not been very popular of late—witness gold’s surge to a record high against the dollar, sterling, the euro and the yen on July 18th. Near-zero interest rates and debt crises on both sides of the Atlantic make investors both risk-averse and nervous that governments might try to inflate their way out of the debt problem.
But there is one exception to the rule: the Swiss franc. As the chart shows, the franc is even stronger in trade-weighted terms than it was in the 1970s, a period when Switzerland imposed negative interest rates in an attempt to discourage foreigners from opening bank accounts.
Read Full Article »