Forex – Winners & Loosers

In the summer of 2007, the value of 1 EUR was 3.20 RON. The value of 1 Swiss Franc (CHF) was 2.10 RON at the schimb vis-a-vis my house.

Last summer (2015), 1 EUR was 4.40 RON; 1 CHF was 4.25 RON.

The effect of this change for me, earning a few CHF a month: the 2015-summer-holidays in Mamaia was basically half the price of the 2007-vacation at the same station.

On the other hand, romanian house buyers who took out a mortgage in CHF around 2007, were desperate, when their payments in RON for the credit doubled over time till 2015.

If currency changes are affecting everyone’s life quite severe, you would think, that people at least know the real reasons behind this changes.

Commuting regularly between Zurich and Bucharest over the last years, I noticed, that when visiting a supermarket in Zurich, a pound of regular bread was about 1 CHF in 2007 – and it’s still 1 CHF today. And the franzela alba in Bucuresti was about 1 RON then – and it’s still about 1 RON today.

So local prices are not the reason behind currency changes. There must be something else. As usual, when curious, I surveyed my colleagues with the simple question: why are currencies changing, what is the main reason?

You might have guessed it, I wouldn’t receive a precise answer, instead I heard a lot of bullsh… and began to understand, why so many romanians were completely surprised, when the costs of their mortgage in a foreign currency, namely in CHF, went up so dramatically.

If they had known at least the basic mechanism of the forex-market, they had never signed for a mortgage in EUR or CHF. And you cannot expect the banks to really give you a honest advise in such a matter, because, as mentioned in other chapters before, banks (especially in Romania) are product sellers, not financial advisors. They sell what’s best for them, not for you.

Instead of be aware of the risk of CHF-credits before, people were protesting after. This, I understand to certain degree, because the general knowledge of financial markets is very poor in Romania, even by some otherwise intelligent people. What really struck me was the following media coverage about credits in foreign currencies, who completely missed the picture, be it on purpose or simply because many TV presenters of ‘news channels’ had no idea, what they were talking about, I suspect the latter.

Isn’t it time for you to know, how the forex-market is working? And why currencies are really changing? Not necessary to make a lot of money with bets on the forex-market directly (this is dangerous minefield for private investors), but at least not to lose your hard earned money because of some unexpected developments in Frankfurt or Zurich.


What you need to know about EUR, USD, CHF & Co. will explained in the next chapter:

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