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CHF Appreciation Takes Its Toll, August Swiss Exports Tumble Most Since December 2008

Tyler Durden's picture





 

Following up on the previous story of a gold referendum push driven by the SNB's last ditch choice to peg the CHF to the EUR and potentially pay for this by selling gold, we next learn that when it comes to its currency, the Swiss National Bank really has no options, following a long overdue collapse in exports in August when the CHF soared on global risk aversion and just before Hildebrand started loading up the "asset" side of his balance sheet with Euros. Unfortunately, just like last year when the SNB intervened and loaded up on dollars only to end its intervention following massive paper losses, this time will be no different and we expect that the Swiss people will see the trade off between keeping a viable currency and a sound export sector as one that will ultimately benefit the former. As to what happens to the latter, here is Goldman with a discussion of the huge collapse in Swiss August exports, which is a harbinger of things to come when the SNB's latest intervention attempt is overruled in several months, and reality reasserts itself.

From Goldman's Dirk Schumacher

Big decline in exports

BOTTOM LINE: Real exports contracted by 7%mom in August, their biggest decline since December 2008. Real imports rose slightly (+0.9%mom) and the trade surplus narrowed from CHF 2.8bn to CHF 0.8bn. To abstract from monthly volatility, we tend to focus on the three-month over three-month average rate of export growth. This fell into negative territory (-1.9%) in August for the first time in 2011.

 

1. The monthly Swiss trade data are volatile and prone to revision. Indeed, in this morning's release, the 3%mom contraction in real exports in July was revised up to show a 1.4%mom expansion. Nevertheless, on a three-month over three-month average basis (to smooth out monthly volatility), exports contracted by 1.9%mom in August - their second lowest 3m/3m growth rate for two years. In smoothed level terms, the decline in exports is notable (Chart 1).

 

2. What's surprising is that this export contraction - which we expect to deepen over the coming quarters as the lagged effects of CHF strength combine with weaker external demand from the Euro-zone and emerging markets globally - has happened relatively late. The level of real exports rose by 14% in the year to June 2011, a period over which the CHF appreciated sharply. That said, the appreciation of the currency stepped up considerably in the middle of this year. In the three months to its peak on August 10, the trade-weighted Swiss franc appreciated by 21% (Chart 2). We will continue to see the negative impact of CHF strength on Swiss export volumes over the coming quarters (Chart 3).

 

3. The survey data on firms' order books also suggest a deterioration in actual export performance is imminent (Chart 4).

 


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Tue, 09/20/2011 - 08:00 | Link to Comment PaperWillBurn
PaperWillBurn's picture

First they peg, then they join

Tue, 09/20/2011 - 08:00 | Link to Comment AngryGerman
AngryGerman's picture

noone wants to buys swiss cheese anymore. buhu

Tue, 09/20/2011 - 08:15 | Link to Comment kaiten
kaiten's picture

too many holes ;)

Wed, 09/21/2011 - 02:42 | Link to Comment Cashboy
Cashboy's picture

As you buy cheese by weight;  I have reverted to always just buying the holes in Swiss emmental cheese now.

Tue, 09/20/2011 - 08:01 | Link to Comment Irish66
Irish66's picture

HKD

Tue, 09/20/2011 - 08:02 | Link to Comment AUD
AUD's picture

when the CHF soared on global risk aversion

This is bullshit. If everyone was running to 'safety' from USD & Euro's why has the price of gold done nothing since the CHF devaluation?

Because risk had nothing to do with it. Speculators were making massive profits on their CHF positions, that was the reason.

Tue, 09/20/2011 - 08:20 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

If you recall, gold dropped about $60 ten minutes before the peg was announced. Now there is wide contrast of reason(s) here, but I am of the opinion that had this 'takedown' not taken place, the announcement would have seen Au reach 2000 within 24hrs. This is not in the interest of the Status Quo, as you may/may not know.

BTW, I hope your name doesn't suggest your favorite currency/trade(Aussie$) otherwise, my condolences.

Tue, 09/20/2011 - 08:20 | Link to Comment Silverhog
Silverhog's picture

Market is flooded with paper metal shit like SLV & GLD. This is no safe haven, it also distorts the value of physical. Everybody in the world can own a boatload of Gold paper.

Tue, 09/20/2011 - 08:27 | Link to Comment kaiten
kaiten's picture

Forget gold. The only safe haven is land.

Tue, 09/20/2011 - 08:34 | Link to Comment PaperWillBurn
PaperWillBurn's picture

because it's easily transportable, liquid on the world market, and has no carrying costs?

 

oh wait..

Tue, 09/20/2011 - 09:31 | Link to Comment kaiten
kaiten's picture

you talk like banker :)

Tue, 09/20/2011 - 10:18 | Link to Comment LowProfile
LowProfile's picture

The portability issue is more important than you realize.

That's because it's infinitely easier for government to take your land than your gold.

Sorry 'bout that.

Tue, 09/20/2011 - 08:37 | Link to Comment He_Who Carried ...
He_Who Carried The Sun's picture

... and Art and Violines.

Tue, 09/20/2011 - 08:34 | Link to Comment outsidertrader
outsidertrader's picture

Who is suggesting that the Swiss would need to sell gold to pay for FX intervention? They can, and will, simply print Swiss Francs. Indeed they could then easily add to their gold reserves by selling some of the newly purchased foreign exchange reserves for gold.

Tue, 09/20/2011 - 08:55 | Link to Comment gmrpeabody
gmrpeabody's picture

You can say that again.

Tue, 09/20/2011 - 08:34 | Link to Comment outsidertrader
outsidertrader's picture

Who is suggesting that the Swiss would need to sell gold to pay for FX intervention? They can, and will, simply print Swiss Francs. Indeed they could then easily add to their gold reserves by selling some of the newly purchased foreign exchange reserves for gold.

Tue, 09/20/2011 - 08:50 | Link to Comment RTFM
RTFM's picture

This is horseshit. As Karl Denninger points out, exports are a TINY SEGMENT of the Swiss economy.

Tue, 09/20/2011 - 08:56 | Link to Comment swiss chick
swiss chick's picture

It could also be that the Eurozone is not importing because they don't have the money!!!!! and not a question of if the CHF has devalued or not?

Tue, 09/20/2011 - 09:06 | Link to Comment mantrid
mantrid's picture

seems central banking cartel really wants to use Swiss gold to slam gold prices and prevent its return as widely recognized money. they'd use gold of Fort Knox but that probably had been already used in 80s for that trick. since the Swiss won't let their gold fly away, expect tungsten prices soar.

Wed, 09/21/2011 - 02:40 | Link to Comment Cashboy
Cashboy's picture

Switzerland should not be forcing the devaluation of its currency.

This is really a short term fix but will be detrimental in the long term.

The Swiss companies that are struggeling to export should just become more competative; i.e. reduce Swiss wages.

Reducing the Swiss wages would actually not reduce the living standards of the Swiss from three years ago because so much of Swiss consumer spending is from imports. These imported goods have become cheaper due to the strength of the Swiss franc.

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