The free fall in stock prices on Friday indicates that investors may finally be focusing on how much trouble the soaring currency means for corporate profits as well as the economy.
The biggest economy in the 15-nation euro area, Germany, rejected fresh calls to dilute the inflation-fighting mandate of the European Central Bank to help rein in the soaring currency.
PARIS — Alarmed by the threat a soaring currency poses to Switzerland's economy, the country's central bank sought Tuesday to cap the value of the franc against the euro and said it was prepared to spend an unlimited amount to defend it.
As a result, they have received huge capital inflows, and are suffering from soaring currencies and high inflation.
These forces have left policy makers with difficult choices about how to keep soaring currencies in check without strangling economic growth.
Inflation has soared, the currency has lost much of its value against other currencies, gross domestic product has fallen 10percentt, unemployment has reached 60percenttourismism has declined by more than half, and hospitals and schools barely function.
To be sure, Iran's oil exports have now been cut down by half, its unemployment rate is soaring, its national currency is collapsing, and Tehran does not have the ability to deal in hard currency - and those are the means which the new administration will continue to make use of, alongside exhausting Iran in Syria, so that it may become "its own Vietnam".
Indeed, when European finance ministers joined Mr Trichet's rebuke to the markets, traders sent the currency soaring again.
Just this week Ben Bernanke, its chairman, demonstrated its influence when a rare comment on the dollar's weakness sent the currency soaring (see article).
Lured by high interest rates, investors have piled into the country, sending the currency soaring to an increasingly overvalued rate, despite an expanding arsenal of taxes designed to deter them.
The SNB shocked foreign exchange markets last September when it imposed a cap on the value of the franc against the euro to stop the currency soaring and thereby hurting Swiss exporters' earnings.
