World Economy

SNB Says Strong Swiss Franc Hurting Country’s Economy

Swiss franc remains a big challenge for many businesses  in Switzerland.Swiss franc remains a big challenge for many businesses  in Switzerland.

The Swiss franc’s high value, especially compared to the euro, the most important currency for Swiss exports, continues to have a negative effect on the confederation’s economy, Swiss newspaper Tribune de Geneve quoted an expert as reporting.

Andrea Maechler, one of the three members of the Swiss National Bank’s governing board, told the newspaper that in addition to the currency valuation, other factors including interest rates, changes in prices and the global situation must also be taken into account when assessing the confederation’s economic outlook, Xinhua reported.

“It’s clear that the strong Swiss franc remains a big challenge for many businesses in Switzerland,” Maechler told the Geneva-based newspaper in an interview. “The value of the Swiss franc is an important factor for Switzerland’s economy, but it is not the only one,” she added.

According to the Swiss official, Swiss gross domestic product is expected to increase by 1.5% this year, matching last year’s growth.

Switzerland’s unemployment rate, which stood at 3.3% in December last year, is also much lower than the 4% recorded in 2009 and the 5% in the mid-1990s, she added.

While expecting a gradual improvement in the labor market, Maechler noted that certain sectors, including Switzerland’s engineering and watch-making industries, had been hampered by the strength of the Swiss currency, as well as by external factors such as the drop in Asian demand for timepieces.

When asked why the SNB was not striving to achieve an exchange rate of 1.10 francs per euro (the Swiss franc is currently trading at around 1.08), Maechler reminded that “a country’s economy cannot rely on one magical number, as important as the exchange rate is.”

“Its competitiveness is linked to both its capacity to innovate and deal with the challenges which it must face,” she added.

Meanwhile, the Swiss franc weakened against most major currencies in the Asian session on Tuesday. The Swiss franc fell to nearly a 3-week low of 112.44 against the yen, from Monday’s closing value of 112.62.

Against the pound and the US dollar, the franc edged down to 1.240 and 0.994 from Monday’s closing quotes of 1.23 and 0.990, respectively.

Add new comment

Read our comment policy before posting your viewpoints