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The Swiss franc has soared since the exchange cap was removed, leading Swiss watch and jewellery brands to consider increasing prices in international markets
The Swiss franc has soared since the exchange cap was removed, leading Swiss watch and jewellery brands to consider increasing prices in international markets

Swiss watch brands outraged over currency decision

The decision to remove a cap on Switzerland’s local currency has resulted in backlash from a number of Swiss watch and jewellery companies, with reports emerging that prices for goods could rise significantly.
Mark Haefele, UBS chief investment officer
Mark Haefele, UBS chief investment officer

Swiss National Bank (SNB) introduced a minimum exchange rate of CHF 1.20 (AU$1.72) per euro in September 2011 in an effort to keep the Swiss franc at a stabilised level. The bank announced, however, that it was eliminating the cap on 15 January because it was “no longer justified”.

Despite the fact that SNB lowered the interest rate to -0.75 per cent in order to counter the effects of its decision, many people expressed surprise and outrage at the move – none more so than the Swiss watch and jewellery industry, which relies heavily on exports. 

Mark Haefele, chief investment officer of Swiss bank UBS, told BBC News the move would likely cost Swiss exporters close to CHF 5 billion (AU$7.2 b) – approximately 0.7 per cent of Switzerland’s total economic output.

It was reported that following SNB’s announcement, the value of the Swiss franc soared to records highs of more than 30 per cent compared to the euro.

Nick Hayek, Swatch Group CEO
Nick Hayek, Swatch Group CEO

This resulted in a 10 per cent or more drop in share price for companies including Swatch Group and Richemont, the parent company for luxury brands Cartier, Van Cleef & Arpels, Montblanc and IWC Schaffhausen.

“This will put significant pressure on our costs in Swiss francs,” a Richemont senior executive told Reuters.

Swatch CEO Nick Hayek also made his sentiments known in an email sent to media outlets: “Words fail me … today’s SNB action is a tsunami – for the export industry and for tourism, and finally for the entire country.”

Price hikes on the horizon
The effects of the bank’s decision were also said to be heavily discussed at the 25th annual Salon International de la Haute Horlogerie trade fair, which was held in Geneva from 19 to 23 January.

Jean-Daniel Pasche, Federation of the Swiss Watch Industry president
Jean-Daniel Pasche, Federation of the Swiss Watch Industry president

Federation of the Swiss Watch Industry president Jean-Daniel Pasche told industry publication JCK that the group was “very anxious about the consequences in the Swiss watch industry”. “We fear negative effects on our exports,” he said.

While it is believed watch companies would not introduce price changes until the currency had settled, it has been widely reported that Cartier would be increasing prices in the euro zone for its watches and jewellery by 5 per cent.

Bloomberg also reported that watch prices in Japan would rise from February, with Patek Philippe expected to increase the cost of its entire watch range by 4–5 per cent and Rolex predicted to lift the price of its steel Submariner Date watch by 8 per cent.

However, it should be noted that a Rolex spokeswoman told Bloomberg the price increase was not necessarily in response to SNB’s decision as the Japanese yen had already began to weaken against the Swiss franc.




















Monday, 25 June, 2018 02:14am
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