International Markets Analysis FINANCIAL PRODUCTS SALES DIVISION Important Disclaimer in page 2

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1 International Markets Analysis FINANCIAL PRODUCTS SALES DIVISION Important Disclaimer in page 2 1

2 Disclaimer The information herein is believed to be reliable and has been obtained from sources believed to be reliable, but we make no representation or warranty, express or implied, with respect to the fairness, correctness, accuracy or completeness of such information. In addition we have no obligation to update, modify or amend this communication or to otherwise notify a recipient in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. We therefore strongly suggest that recipients seek their own independent advice in relation to any investment, financial, legal, tax, accounting or regulatory issues discussed herein. Analyses and opinions contained herein may be based on assumptions that if altered can change the analyses or opinions expressed. Nothing contained herein shall constitute any representation or warranty as to future performance of any financial instrument, credit, currency rate or other market or economic measure. Furthermore, past performance is not necessarily indicative of future results. This communication is provided for information purposes only. It is not an offer to sell, or a solicitation of an offer to buy, any security, nor to enter into any agreement or contract with Alpha bank or any affiliates. In addition, because this communication is a summary only it may not contain all material terms and therefore this communication in and of itself should not form the basis for any investment decision. Financial instruments that may be discussed herein may not be suitable for all investors, and potential investors must make an independent assessment of the appropriateness of any transaction in light of their own objectives and circumstances, including the possible risks and benefits of entering into such a transaction. By accepting receipt of this communication the recipient will be deemed to represent that they possess, either individually or through their advisers, sufficient investment expertise to understand the risks involved in any purchase or sale of any financial instrument discussed herein. 2

3 EUR/CHF Swiss National Bank surprisingly decided today (15/1/15) to discontinue defending the minimum exchange rate of 1.20 CHF per euro. SNB also lowered the target range for the three-month CHF Libor into negative territory between -1.25% and %, from the previous range of -0.75% and 0.25%. SNB was enforcing the rate of 1.20 EUR/CHF, via buying of foreign currency in potentially unlimited quantities, since September Following the unexpected decision of the SNB, EUR/CHF posted today historic low ( CHF). It is currently trading at the area of EUR/CHF was trading at the area of 1.03 in August 2011, just one month before the introduction by the SNB of the defending minimum rate of 1.20 (6/9/2011). 3

4 Taking into account, that the benchmark rate of the ECB is at 0.05% versus 1.50% in September 2011, it is reasonable to expect that the downwards pressure for EUR/CHF will continue in the short term. Key event ahead is the ECB meeting on January 22, when it is possible that the ECB will expand its asset buying programme in order to include government bonds buying. In case, the ECB does decide a large scale government bonds programme on January 22, it is probable that EUR/CHF downtrend will continue in the short term. Swiss National Bank will probably need to frequently intervene in the FX markets, at times when the downwards trend of EUR/CHF becomes extreme. However, it seems unlikely that the SNB will explicitly set another minimum exchange rate target. Reading through the release statement, it can be inferred that Swiss National Bank will use a combination of monetary policy decisions, such as more benchmark rate cuts, along with foreign exchange interventions (probably with no explicit target rate) in order to avoid deflation. 4

5 12/04 04/05 08/05 12/05 04/06 08/06 12/06 04/07 08/07 12/07 04/08 08/08 12/08 04/09 08/09 12/09 04/10 08/10 12/10 04/11 08/11 12/11 04/12 08/12 12/12 04/13 08/13 12/13 04/14 08/14 12/14 Swiss CPI ( ) 3,5 3 2,5 2 1,5 1 0,5 0-0,5-1 -1,5 The strength of the swiss franc versus the euro will probably push swiss economy into deflation. The Chairman of the SNB said today that oil-price drop will further dampen CPI outlook. 5

6 INTERNATIONAL MARKETS ANALYSIS Panos Remoundos Maria Koutouzi Ioannis Kouravelos, CFA 6