It is widely recognized that the sharp depreciation of the Japanese yen has not lifted Japanese export volumes. In December 2015, Japanese export volumes had fallen 4.4% year-over-year after rising 3.9% in December 2014 and 2.5% in December 2013. 

These are a number of explanations for this counter-intuitive result given the yen’s past depreciation. First, global demand is weak. Second, has adopted a direct investment strategy rather than an export-orientation. For example, many of the Japanese brand autos in on the US highways were produced in the US. Servicing foreign demand through local production may diminish exports. Third, Japanese producers did not risk antagonizing competitors may cutting prices to boost market share. Japanese producers were content to let the translation of foreign earnings boost the yen value of their revenue. 

The weaker yen did not produce the kind of export gains that many economists, especially those who stress currency wars, had anticipated.  However, there are two other anomalies that may not have received nearly as much attention. 

First, let’s look at the Swiss trade balance. Recall that January, the Swiss National Bank lifted its cap for the franc and its appreciated sharply.  What has happened to the Swiss trade balance and exports over the past year?

The February trade surplus was a record high of CHF4.07 bln. This is a not a one-month fluke. The 12-month moving average is CHF3.21 bln.  The February 2015 trade surplus was CHF2.28 bln, and the 12-month moving average stood at CHF2.55 bln. In volume terms, exports have risen 6.4% year-over-year. 

According to the OECD, the Swiss franc is the most over-valued of the major currencies at 24.3%. The second most over-valued, according to the OECD is the Danish krone at 11.2%. The same methodology finds the euro, where the destination of the bulk of Swiss exports, the most under-valued at 17.7%.