©2012 Chappatte, distributed by Globe Cartoon. More cartoons on Chappatte’s web site. Geneva-based Patrick Chappatte works for the International Herald Tribune, for Geneva newspaper Le Temps, and for NZZ am Sonntag. All cartoons reproduced with permission.
GENEVA, SWITZERLAND – Angela Merkel, German chancellor, has her first-ever meeting with her new French counterpart, Francois Hollande, who takes office as president Tuesday 15 May before flying to Berlin.
The two meet the day after eurozone finance ministers get together, Monday, to find a way forward with policy, just as voters are moving towards more extreme positions in a number of country’s.
Merkel’s own Christian Democrat party lost heavily in the key state of North-Rhine Westphalia Sunday and Greece is finding it increasingly difficult to put together a coalition government. Merkel continues to push for austerity as the key to solving the eurozone economic crisis, while Hollande campaigned for office on a platform of increasing spending.
The Guardian offers a glum picutre, “Against a background of intense volatility, Europe was pulled in opposing directions by voters, protests, and political paralysis at the weekend, deepening uncertainty over its future shape and gnawing away at the prospects for the euro‘s survival as a 17-country union.”
Reuters earlier reported on the OECD’s latest figures: “Economic activity in the euro zone is diverging, with Germany leading a group of economies showing slightly more positive signals while France and Italy are posting sluggish activity below long-term trends, the OECD said on Thursday.”
GENEVA, SWITZERLAND – International financial markets fell sharply Monday 7 May after weekend French and Greek national elections showed voters calling for change. Markets reacted with renewed concern over Europe’s ability to deal with its debt crisis.
Financial media, including the Financial Times and The Guardian, have underscored investors’ worries about how the new French Socialist president will work with Germany, which opposes funding growth with more debt.
Asian stock markets slid, reacting also to the release of disappointing US labour data. Tokyo’s Nikkei 225 index closed down 2.6 percent to 9,134.26 and Hong Kong’s Hang Seng dropped 2.4 percent to 20,582.24.
In Europe, major stock markets fell sharply in the morning, then recovered. France’s CAC 40 lost 1.9 percent in early trading to settle at a gain of 1.03 percent at closing time, while Germany’s DAX index was down by as much as 2.7 percent during the day but closed down only 0.2 percent.
Markets in London were closed for a bank holiday.
Currency, bond markets also reflecting uncertainty
The Greek stock exchange suffered from the political stalemate left from Sunday’s elections, with the Athens Stock Exchange Index, ASE, down 6.7 percent. Greek voters shunned the centrist governing parties responsible for austerity measures which have been adopted to avoid a national default. Although extreme left- and right-wing parties saw important gains, no single party achieved an absolute majority, and the country faces the possibility of a second round of voting and prolonged uncertainty.
Currency markets were also jittery.
The euro hit a three and a half year low against the pound and a three month low against the dollar, dipping under the $1.30 level.
Yields on government bonds were mixed, with the 10-year French bond decreasing to 2.8 percent and the 10-year German bond rising to 1.6 percent. The yield on Greek debt rose even further with the 10-year government bond there reaching 23.30 percent.
Swiss franc weakens slightly but not enough for the SNB
ZURICH, SWITZERLAND – The Swiss franc weakened in trading Monday, to $.90 after earlier trading at $.88. It was also weaker against the euro, at 1.24, but with the day’s low at 1.22.
Philipp Hildebrand, Swiss National Bank chairman, told Swiss German papers over the weekend that the bank will continue to push the franc down, seeing it as still very over-valued.
Monday’s news that the consumer price index had dipped slightly, but for the first time in two years, will put further pressure on the central bank to get the franc down to avoid recession.
ZURICH, SWITZERLAND – The Swiss National Bank 3 October published a table of the path the Swiss franc has taken against several key currencies since July 2010, showing clearly its dramatic rise. Against the euro, the rate has shifted from CHF1.3471 to CHF1.20 in 15 months and against sterling from CHF1.6111 to CHF1.3768. The dollar rate has moved from CHF1.0549 to CHF0.8723.
Swiss central bank to protect the franc with "utmost determination"
ZURICH, SWITZERLAND – The Swiss franc’s cap against the euro will be protected “with utmost determination”, the Swiss National Bank said Thursday 15 September, repeating its earlier stance that it is prepared to “buy foreign currency in unlimited quantities” to get the exchange rate of the “massively overvalued” franc back to more appropriate levels.
The SNB used its strongest language yet in describing the “acute threat to the Swiss economy and the risk of deflationary development that spring from the massive overvaluation of the Swiss franc”.
It pointed to the worsening of the economy, saying “the outlook for the advanced economies, in particular, has worsened considerably” and that the high franc coupled with softening international demand will result in GDP growth of 1.5-2.0 percent only because of growth in the first half of the year.
“Without the stabilizing effect of the minimum exchange rate there would be a substantial risk of recession”.
Choppy waters for Swiss but particularly French shares 12 September
ZURICH, SWITZERLAND – Worries over the sovereign debt and financial sector woes in the euro zone hit world stocks Friday 9 September, and the slide continued Monday, with European stock markets down by 2.5 to 4.1 percent in the morning. The SMI, Swiss index of star shares, suffered less than most, down 2.3 percent.
Asian markets, too, were down, but the damage was contained with China and Singapore taking holidays.
The euro fell to a six-month low of $1.35 before rising again, but it hit a 10-year low against the yen.
The reasons are varied, from rumours that proved untrue that Greece would default over the weekend to UK to stories circulating that French banks will be downgraded by Moody’s. Le Temps reports that French bank shares fell by 10 percent Monday.
The Financial Times summarizes a long list of investors’ concerns saying it is “a difficult batch of headline risks for traders to navigate, especially given that beneath the surface of all the eurozone kerfuffle lurks the concerns about an already slowing global economy.”
Citigroup has pared 45 percent from earnings estimates for US banks, in part because of the fall in global equities, reports Bloomberg. The FTSE world index has slipped nearly 20 percent since May.
The Swiss franc was just above the limit set by the Swiss National Bank against the euro, at 1.2058 Monday early morning.
Coop's web site and ads over the weekend said "Enough is enough", asking consumers to back the supermarket chain in its refusal to work with brands the company says are taking advantge of recent exchange rates
ZURICH, SWITZERLAND – The Swiss franc was traded Monday in ranges of $1.2505-1.2867 and €.8734-.9025, according to Reuters, with the franc weakening early in the day after last week’s climb, thanks largely to the Swiss National Bank’s insistence that it will intervene if the safe haven impact on the franc’s position does not end.
But by day’s end the dollar had lost ground and the rate was $1.2751 and euro investors were wary, ending the European trading day at €.8791.
The Wall Street Journal reports that the dollar’s gentle slide Monday was due to a combination of a report that manufacturing in the New York region contracted more than expected, the Treasury Department saying that “foreign investors bought a net $3.7 billion of long-term US assets in June, down sharply from May as private foreign investors sold a record amount of Treasury bonds in the month” and “a report from the National Association of Home Builders/Wells Fargo showing confidence remained stuck at very low levels this month. The data were in line with expectations and shrugged off by equity markets.”
Reuters notes that “risk appetite” was up Monday.
Investors are looking for positive European news Tuesday from France and Germany as well as the euro region, which will post its second quarter GDP (gross domestic product) data.
Swiss supermarkets put pressure on brands
Swiss retailers who have bemoaned the Swiss franc include the large supermarkets, two of which have announced they will sell some of their more expensive brands for 50 percent to get rid of stock, then stop carrying certain brands whose manufacturers refused their demands for lower prices. Coop and Denner have both published statements about their tactics.
A rocky ride for the Swiss franc this week
ZURICH, SWITZERLAND – The Swiss franc lost 4 percent Thursday against major currencies, in the wake of remarks by central bankers that it could be pegged to the euro, according to Daily Markets. Reuters at 16:30 Swiss time shows the franc trading at euro 1.0872, compared to 1.03 a day earlier at market closing. It was trading at $.7625 and £1.2344.
The resistance of the Swiss franc, which has toyed with euro parity this week, to going lower is prompting Swiss National Bank (SNB) officials to publicly mention the possibility of a temporary pegging of the Swiss franc and the euro. Such a move would be designed to stabilize prices, SNB board members Thomas Jordan and Jean-Pierre Danthine have told Swiss newspapers Tages-Anzeiger and Le Temps in the past two days, possibly preparing the public to accept such a move.
Jordan points out, however, that such a move could be only temporary, as it runs counter to the SNB’s mission.
A Chinese TV travel programme film crew shoots preparations for the 1 August national holiday celebrations at a chalet in Valais
Chinese most rapidly growing group of visitors
ZURICH, SWITZERLAND – The Swiss franc has been soaring, but tourists continue to visit Switzerland, the country’s latest tourism figures show.
The first six months of 2011 show a very slight slippage, down 0.2 percent compared to the same period in 2010, with foreign visitors’ overnight stays down 6.9 percent.
The numbers show some surprises, however.
The 7.6 percent drop in the number of overnight stays by Germans, Switzerland’s largest group of tourists, is blamed on the weakness of the euro, but overnight stays by US visitors were up 3.6 percent to more than 700,000 overnight stays despite the increasingly weak dollar.
Germany remains by far the biggest tourism client, with 2.75 million overnight stays from January to end-June, with the UK in second place with 923,000.
Swiss raclette cheese explained, 1 August 2011, to Chinese TV crew
But the number of Chinese tourists (minus Hong Kong) is growing more rapidly than any other group: 221,218 overnights during the first six months of the year, a 39 percent increase. And of the increase of 61,000 overnights, more than 20,000 were in the month of June alone.
China is now the 10th largest source of tourists, close on the heels of India 270,238 overnights during the same period.
China and India are the only non-European countries in the top 10 besides the US.
Virtually all tourism regions in Switzerland saw a slight increase in the first six months of the year, with Graubuenden and Valais as exceptions, but both are big ski destinations and the lack of snow in the latter part of the winter may have had an impact.
Tourism office officials said earlier this year that it generally takes a few months for the impact of exchange rates to show in the figures, since holiday travel is generally booked ahead.
ZURICH, SWITZERLAND – ABB’s profits are up, but Roche’s are down, the Swiss competition commissioner says the low euro is showing that savings are not passed on to Swiss consumers, and exports are holding their own, just. The continuing strength of the Swiss franc coupled with the weakness of the euro is etching out a mixed picture for Swiss industry, with half-year results coming in this week.
The euro’s situation could well shift after European Union leaders meet Thursday afternoon 21 July to resolve the Greek debt crisis, with pundits and markets more optimistic since sparring partners France’s President Nicolas Sarkozy and Germany’s Chancellor Angela Merkel agreed on a way forward Wednesday night.
Exports up 4.6 percent in first six months, but slowing down in Q2, prices down
Exports by industry, nominal variations in %, comparison with previous year for June and Jan-June (click on image to view larger)
Switzerland had a trade balance surplus of CHF11.6 billion at the end of June, with exports for the first half of the year up 4.3 percent compared to a year earlier, and imports up 2.7 percent.
The figures hide a slowdown in the second quarter, attributable to the growing strength of the Swiss franc during that period, says Bern: only three industries saw growth and prices were down by 4 percent excluding the pharmaceutical industry and 6.6 percent including it.
Demand for Swiss products and services from Asia were strong, up 14.4 percent, while European orders were stagnant at 0.9 percent; the same held true for imports, with some surprises. Despite the weak dollar, imports from the United States were down 10 percent and from Canada down 25 percent.
GENEVA, SWITZERLAND – The price of gold, like the Swiss franc, continues its meteoric rise, reaching the record price of $1,600 an ounce as worries grow about the US debt ceiling negotiations and sovereign debt in several European countries.
One-ounce gold US eagle coins are selling like hotcakes in New Orleans, reports USA Today. By Tuesday morning gold was hovering just below Monday’s record high, reports Reuters, as the dollar and euro remain weak.
Swiss franc reaches record highs against euro, dollar
ZURICH, SWITZERLAND – The Swiss franc was being exchanged in Asia for $.81 and €1.14 shortly before midnight, TSR reports. Thursday’s exchange rates as listed by Reuters showed the franc trading at $.81 and €1.16 at 14:00 Swiss time Thursday.
The Swiss currency was trading at new highs against the dollar and the euro, as concerns grow over the US debt ceiling, rising debt costs for Italy and the downgrading of Irish sovereign debt.
Estonia 1 January became the 17th nation to adopt the euro as its currency, with Prime Minister Andrus Ansip taking cash out of an automatic teller machine as the changeover took place. It is the only former Soviet Union country that is part of the zone. Its GDP of 14 billion euros makes it the second smallest euro partner, with only Malta having a smaller economy, among the group, according to Bloomberg.
Swiss current account surplus rises to CHF21b, while franc reaches record against euro
Q3 2010 Swiss Balance of Payments: SNB
Zurich, Switzerland (GenevaLunch) – Switzerland finds itself, as 2010 draws to a close, in the unusual position of having a growing current account surplus that stands at CHF21 billion for the third quarter while the Swiss franc reaches a record against both the euro and the dollar.
The current account shows an increase of CHF6 billion in receipts from direct investments outside the country, but trade in goods and services contracted by CHF1b, leaving the current account surplus at CHF5b higher. The Swiss franc’s rise would normally be expected to put a stronger dent in the balance of trade.
Safe haven franc hits record highs against dollar, euro
The Wall Street Journal reports Thursday early afternoon that “the euro fell below 1.24 Swiss francs for the first time, while the dollar and the pound both printed new record lows against the safe-haven currency of 0.9371 francs and 1.4550 francs, respectively.”
The exchange rates are generally somewhat exaggerated at year-end by light trading, which emphasizes movements, and this year the overall weakness of the dollar is a special factor, but during 2010 the franc has appreciated 9 percent against the dollar and 18 percent against the euro.
Strong trade with Asia, Latin America; watch and machining industries recovering
Swiss exports, November 2010, by industry, compared to November 2009 (source: Swiss Federal Statistics Office)
(video, Hublot watchmaking) Bern, Switzerland (GenevaLunch) – Swiss foreign trade improved in November 2010 compared to November 2009, with exports of CHF17.5 billion up 7.4 percent and imports of CHF15.6b up 11.3 percent, both in real terms, adjusted for inflation.
The trade balance, with a surplus of CHF1.9b, was 5 percent lower than in the same period a year earlier. The trade balance in October was more than 13 percent down from a year earlier, and in September 8 percent, indicating a closing gap as Swiss foreign trade rebounds from the global economic crisis.
Euro at record low against franc Monday
The news comes as the euro Monday 20 December reached an all-time low against the Swiss franc, dipping to CHF1.2636 at one point, report Dow Jones and Le Temps. The dollar was at CHF0.96 in trading Tuesday (Reuters chart, dollar/franc since October 2010).
For 2010 as a whole, rounded figures show that Swiss exports have risen 7 percent and imports 8 percent. The trade balance of CHF18.76 at the end of November was down 1.2 percent compared to 2009, for the year to date.
Watchmakers at Hublot in Nyon, part of a sought-after highly skilled group
The watch industry was the main driver in November, with a 30 percent increase in exports, well up from a year earlier. Metal-working, machining and electronic industries also showed good growth, but the clothing industry continued to perform weakly, with exports lower than a year earlier.
Le Temps reports 21 December that while the watch industry is hiring again, and more than 700 jobs are currently advertised in the Jura region which is the heartland of the Swiss watch industry, some of the companies are still struggling to recover.
International business, exchange rates
Swiss franc goes a little further
Geneva, Switzerland (GenevaLunch) – The Swiss franc rose again on early trading, Friday 17 December. It traded at new records against the pound, with sterling falling below CHF 1.50. The euro was also at a record low, just over CHF1.27. The Swiss franc is also trading well above the dollar, which only gets a shade under CHF 0.96.
The soaring Swiss franc is partly a result of fears about other economies, with the United States budget deficit looking like it will rise; continued fears about the future of Ireland, Greece and Spain; and political instability in Britain. It is good news for those who are paid in Swiss francs and are planning their winter vacations and shopping trips, but bad news for companies trying to export from Switzerland.
Links to other sites: fx.com,Financial Times
First three quarters 2010 show CHF8.46b loss due to foreign currency holdings
UBS bailout fund “positive”
A fistful of dollars isn't what it was a year ago, same for euros
Zurich, Switzerland (GenevaLunch) – The Swiss National Bank (SNB) has posted a loss of CHF8.46 billion for the first nine months of 2010, due largely to its foreign currency holdings. Exchange rate losses totalled CHF21.2b during the first three quarters, with the euro trading 10.3 percent lower than at end-2009 and the US dollar falling 5.4 percent in the same period.
A year earlier the SNB showed a CHF6.89b profit for the same period.
The loss is before allocation to provisions for currency reserves, which the SNB is required to set up to maintain currency reserves at a level needed for monetary policy.
The Euro has dropped below $1.27 in early trading 9 September after a German member of the European Central Bank, Juergen Stark, told the German government of the ECB’s concerns over German savings banks and the Landesbanken, saying some of them may need more capital. Germany’s public banks were not subjected to the ECB’s “stress tests” in July. German government bond prices rose as investors sought safer assets. The euro was at 128.97 to the Swiss franc at noon 9 September.
Links to other sites: Bloomberg, BusinessWeek
Zurich, Switzerland (GenevaLunch) - The Swiss franc is at near parity with the US dollar following stronger than expected GDP results. The euro, which in the past week has sunk to record lows against the franc, was boosted by remarks by European Central Bank President Jean-Claude Trichet to the effect he does not expect a double-dip recession. Bloomberg reported Thursday 2 September that “the currency climbed 0.5 percent to $1.0111 as of 10:50 in Zurich. It appreciated 0.4 percent to 1.2964 per euro, after strengthening to a record high of 1.2852 on August 31.”
Links to other sites: Bloomberg, Financial Times (31 August), XE exchange rate site
Update 26 August Zurich, Switzerland (GenevaLunch.com) - The Swiss franc rose to a new high as the euro slipped below CHF1.30 Wednesday 25 August. The Swiss National Bank decided earlier this year that it would no longer intervene to halt the rise of the franc after losing more than CHF14 billion from selling francs to slow down the currency’s appreciation. The euro has been under pressure with bond yields soaring in Greece and Irish debt being downgraded. The Swiss franc has been acting as a safe haven for investors worried about Europe and the fear of a double dip recession in the USA.
Yields on 10-year Swiss bonds fell to 1.02% as funds swept into Switzerland. The strong Swiss franc might be good news for those who earn Swiss salaries but it will make it harder for Swiss exporters to compete.
The Wall Street Journal notes in an article published Thursday that the man widely considered likely to become Switzerland’s next finance minister, Johann Schneider-Ammann, is strongly in favour of a weaker franc, and he backed the SNB’s intervention policy earlier this year. Schneider-Ammann is the head of Swissmem, the machinery industry’s association, and he has close ties to industry in general. The current finance minister, Hans-Rudolf Merz, retires in October. Both are centre-right politicians.
Zurich, Switzerland (GenevaLunch) – The FTSE in London fell to a nine-month low Tuesday in the wake of a drop in Asian shares to a 10-month low over fears about the euro’s weakness, but also geopolitical concerns. ‘Continuing concerns about the impact on global growth of the eurozone debt crisis have now been joined by fears that the Korean peninsula may be sliding towards conflict,” the Financial Times reports. North Korea is reportedly preparing its troops after South Korea’s insistence that the North torpedoed one of its boats.
The dollar is rising, as are commodity prices, and the Swiss franc rose against the euro Tuesday to CHF.70/euro. The latest euro worry is Spain’s takeover Monday of ailing savings bank CajaSur, according to the Wall Street Journal.
Links to other sites: Le Temps, Wall Street Journal
American tourists should be back, even if euro spenders are down
Lucerne and its Four Cantons lake is a favourite with US tourists
Bern, Switzerland (GenevaLunch) - The latest tourism forecast for the Swiss government by BakBasel shows overnight stays expected to drop slightly during the May-October summer season, down 0.7 percent, mainly due to the weak euro and unemployment in Europe. But American tourists are expected to return after a 2009 summer where they were scarce on the ground. The latest figures for the winter season that has just ended show what Bern describes as a surprising increase, up 0.2 percent.
The tourism industry will remain in something of a slump in 2011, but should see growth again, 17 percent, in 2012.
The euro bounced back briefly but then dipped again after hitting a four-year low Wednesday 19 May, with investors concerned about market regulation. Berlin sparked heated discussion and provoked irritation in other European capitals when it went solo, without forewarning, on a decision to ban naked short selling (“selling shares that are not owned or borrowed,” – FT).
Links to other sites: Bloomberg, Financial Times, Reuters
Zurich, Switzerland (GenevaLunch) – The Swiss National Bank ended the first three months of the year with a
consolidated profit of CHF1.5 billion, with gold pulling the balance sheet up and exchange rates tugging it down. The rising price of gold accounted for CHF1.3b of the profit, while currency losses, notably the fall in the euro, accounted for a loss of CHF2.46 million.
The stabilization fund that was part of the UBS bank bailout in late 2008 was reduced by CHF2.6m to CHF17.7m, and it contributed CHF921m to the overall profit for the period.
Gold continues its climb to record prices this week, and the Swiss franc reached a new high against the euro in trading Friday morning.
Links to other sites: CS Monitor, Reuters
The European Union’s finance ministers have agreed to a generous package of €500 billion in aid for Greece and the eurozone, the bulk of it in the form of loan guarantees. The European Commission will provide f €60b in emergency funding for members having “difficulties caused by exceptional circumstances beyond their control”, said Elena Salgado, Spain’s finance minister, who announced the deal. The IMF has agreed to provide an additional €250b package.
Stock markets rose on the news, with analysts saying it will stabilize the euro.
Links to other sites: BBC, Financial Times, Reuters, Wall Street Journal
Swiss franc rises against dollar, euro
Zurich, Switzerland (GenevaLunch) – The Swiss National Bank Thursday 6 May has reportedly called a halt to the purchase of euros it has appeared to be making for some days. The SNB had been intervening to keep the euro above CHF1.43, possibly because of a 0.9 percent increase in the consumer price index in April, according to analysts questioned by the Financial Times and Reuters. The euro fell by 2 percent in just minutes earlier Thursday to CHF1.41, its weakest point against the franc since the euro was created.
The euro fell to a 14-month low against the US dollar, to $1.2736 on news that the European Central Bank would not offer “new measures to ease the Greek crisis”, Reuters reports.
Swiss francs reaches record high
Zurich, Switzerland (GenevaLunch) – The Swiss franc reached 1.4233 against the euro Wednesday, a record high. Economists interviewed by several publications indicate that the euro is likely to continue to slip to CHF1.40 before the Swiss National Bank (SNB) intervenes. The European Union is Switzerland’s largest trade partner and although exporters are watching the situation closely an impact on exports is not yet having a clear impact. The euro continues to be hit hard by uncertainty over Greece’s economic situation.
Greece, which needs to borrow or refinance €53 billion in 2010, has turned to Germany in particular and the European Union in general to ask for a clear message that they back Athens’s austerity measures. Greek Deputy Foreign Minister Dimitris Droutsas Thursday morning 4 March asked for the support in order to help Greek financial markets, to allow the country to borrow more cheaply. Wednesday, US and EU regulatory officials said they were examining trading in the euro, as a result of the Greek financial crisis impact on the euro currency market.
Links to other sites: Financial Times, Reuters
The US Federal Reserve said Wednesday 16 December that the US economy is improving, and in the hours that followed the US dollar gained against most other major currencies. It was up 0.9 percent against the euro, a three-month high. The Fed said it wants to keep interest rates “extremely low” but that figures on jobs and consumer spending are showing positive signs.
Links to other sites: Bloomberg, Financial Times, Time Magazine
Zurich, Switzerland (GenevaLunch) – The US dollar continued its slide in world currency markets, pushing the price of gold higher. It reached near parity with the Swiss franc, at 1.0048, in trading Monday 16 November, and was virtually at 1.50 euros: 1.4960. Gold rose to $1,132.95 although it later slipped slightly.
Links to other sites: Bloomberg, Financial Times
