Home / Business and Economy / Swatch CEO Warns of Franc's Overvaluation
Swatch CEO Warns of Franc's Overvaluation
19 Mar
Summary
- Strong Swiss franc makes exports expensive and squeezes profits.
- CEO fears SNB inaction due to potential US trade tariffs.
- Manufacturers may relocate or close due to currency pressures.
Swatch Group CEO Nick Hayek expressed significant worry about the Swiss franc's current strength, stating it puts the domestic industry at risk. The safe-haven currency has reached 11-year highs against the euro and continues to appreciate against the dollar, making Swiss exports more expensive and reducing manufacturers' profit margins.
Hayek suggested the Swiss National Bank (SNB) might be avoiding intervention to prevent being labeled a currency manipulator by the United States. He indicated that this excessive appreciation is making it increasingly difficult to sustain industrial manufacturing within Switzerland. The SNB is expected to announce its monetary policy decision soon and previously stated a willingness to intervene against rapid franc appreciation.
Smaller manufacturers face the possibility of relocating production overseas or shutting down entirely if the currency pressure persists. Hayek emphasized the broader impact on the country, including apprenticeships and manufacturing expertise. Additionally, Swatch Group is pursuing reimbursement for U.S. customs duties paid under previous tariffs, with potential refunds estimated in the tens of millions.
