Forex trading

After arguably the biggest forex trading scandal of the decade, Philipp Hildebrand, chairman of the Swiss National Bank, resigned after months of controversy surrounding his wife’s currency dealings – and the Swiss Franc responded by surging to its highest point in three months on the forex markets.

During trading on Monday (January 09, 2012), the Swiss Franc reached CHF1.2106 compared to the euro – this its highest marker on the forex market since late September.

The gains on the forex market proved short-lived for the Swiss Franc. Initially, doubts were raised about the ability of the European Central Bank (ECB) to sustain the floor of CHF1.20 that was established in the exchange rates between the euro and the franc back in September. Yet with the ECB stating that the floor would be maintained, the currency gains proved temporary.

From this point on, it is expected that there will be little change on the forex trading markets following Hildebrand’s resignation because the circumstances for his departure are so well known.

His wife, Kashya, had invested Sfr400,000 worth of US dollars immediately before the Swiss National Bank acted to halt the Swiss Franc’s rise – and sold them at a profit of Sfr60,000 just two months later with her husband not reporting the deal to the Swiss National Bank until a day after it had closed.

Auditor PricewaterhouseCoopers issued a report stating that Kashya Hildebrand had not broken the bank’s rules with regards to trading from family members. However, the bank announced that it would audit all transactions from board members over the previous two years.

Elsewhere in the forex markets, most forex trading banks are predicting that the euro will continue to fall. It is suggested that the ECB will freeze interest rates as part of its policy meeting on Thursday – but bond auctions in Spain and Italy are expected to meet low expectations.

Deutsche Bank has predicted that the euro may drop to $1.20 when compared to the US dollar by June; and could fall to Y90 against the yen by the same month. However, predictions elsewhere are even bleaker for the currency, with Nomura Securities suggesting that the euro will drop to $1.20 on the forex trading markets before the conclusion of the first quarter – primarily due to the debt crisis that has gripped the region.