Swiss Franc's Journey From Haven During Turmoil to Pimco Pariah
- Correlation to stocks broke down when SNB scrapped franc cap
- Japan follows Switzerland's lead with negative rate strategy
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The Swiss franc’s reaction to the latest gyrations in global markets is raising questions about its traditional role as a haven.
The franc has fallen this month even as stocks around the world entered bear markets, and it’s now weaker against the euro than at any time since Switzerland abandoned its exchange-rate cap a year ago. The Swiss National Bank replaced the ceiling with a policy of interest-rate cuts and franc sales to keep the currency weak, and Pacific Investment Management Co. says it’s now too illiquid to trade.