Trouble In Paradise – Strength Of Swiss Franc Roils Saint-Tropez And Other Cities Across Europe

The bottom line is many homebuyers in Eastern Europe as well as government entities across Europe borrowed money at low interest rates tied to the Swiss franc but with the principal payback owed in Swiss francs. The weakening euro and fear of sovereign debt defaults have made the Swiss franc today the safe-haven currency of choice for the world and as you know it has substantially appreciated against the weakening euro and dollar. Now the borrowers can't afford to pay back the debts in Swiss francs because of the falling values of their home currencies verses the Swiss franc. ... "Like Saint-Tropez, many municipalities across Europe are saddled with loans carrying variable interest rates pegged to fluctuations in the Swiss franc, other foreign currencies or various commodity prices .... Jittery investors have been turning en masse to the Swiss franc and other assets deemed as safe havens amid growing concerns over sputtering economic growth in the U.S. and Europe." – WSJ