ZURICH, SWITZERLAND – Swiss households reacted cautiously to the economic uncertainties of 2010 by putting more money into savings. Net worth (financial assets + real estate – liabillities) per capita increased by CHF6,000 to CHF341,000.
Losses on investments linked to the strong Swiss franc and falling markets had an impact, but higher savings and rising real estate prices offset the losses.
The Swiss National Bank says Friday 18 November that “the net worth of households rose by CHF74 billion, or 2.8 percent, to CHF2,691 billion. The main reasons for the increase were the persistently high level of saving by households and the further advance in real estate prices. By contrast, currency movements reduced the growth in household wealth by some CHF25 billion.”
The SNB details some of the changes:
“Currency movements had a considerable impact on financial assets. From end-2009 to
end-2010, the euro lost 16% against the Swiss franc, while the US dollar lost 10%. As a
result, households suffered losses amounting to some CHF 25 billion on the value of their
foreign currency investments, measured in terms of Swiss francs. Domestic share prices
were stable. Share prices on foreign stock exchanges rose slightly, but this did not offset
the currency losses on foreign shares.
“Deposits with banks and PostFinance grew by CHF 36 billion to CHF 586 billion, due partly
to household savings and partly to a shift from debt securities to deposits.”
Real estate prices had a significant impact on household wealth, with rising prices and growth in mortgages, but consumer lending otherwise remained stable. “The value of real estate owned by households (single-family homes, owner-occupied apartments and apartment buildings with rental apartments) grew by CHF55 billion to CHF1,415 billion. The largest part of this advance was attributable to higher real estate
prices in all three categories. Household liabilities rose overall by CHF 30 billion to CHF 682 billion. Mortgage loans, which account for some 90% of this total, increased by CHF 28 billion to CHF 632 billion. Consumer loans remained stable at CHF 15 billion, while other loans advanced by CHF2 billion to CHF32 billion.”
ZURICH / BERN, SWITZERLAND – The Swiss National Bank is showing a consolidated profit of CHF5.8 billion for the first nine months of the year, thanks primarily to gold prices. The profit was achieved despite an over-valued Swiss franc that caused losses of CHF4.7 billion.
Other currency positions resulted in gains of CHF5 billion, giving the central bank a net currency position of CHF0.3b. The over-valued Swiss franc and intervention by the SNB, particularly in August and September, were the main factors in the bank’s currency situation at the end of nine months. The bank notes that at the end of the quarter, the US dollar was trading 3.1 percent lower than at the beginning of the year, and the euro 2.8 percent lower.
The SNB’s currency investments are 55 percent in euros, 25 percent in dollars, 9 percent in the yen, 4 percent in sterling, 4 percent in Canadian dollars and 3 percent in other currencies.
The price of gold at the end of September accounted for the bulk of the profit: it was around CHF47,089 per kilo, giving the bank a valuation gain of CHF5.0 billion. But the bank noted in a statement issued Monday 31 October that “the SNB result depends largely on developments in the gold, foreign exchange and capital markets. Consequently, strong fluctuations are normal, and only provisional conclusions are possible as regards the annual result.”
UBS bailout fund loan down by CHF4b to outstanding CHF7.9b
The stability fund, created for the government’s bailout of bank UBS in 2008, contributed CHF573 million in interest payments, to the central bank’s profits. “The loan to the stabilisation fund was reduced from CHF 11.8 billion (USD 12.6 billion) to CHF 7.9 billion (USD 8.8 billion), and the total risk exposure decreased from almost CHF 14 billion to around CHF 8.7 billion.”
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.
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.
Swiss franc pegged to euro: central bank hopes it will be less attractive today
ZURICH, SWITZERLAND – The Swiss National Bank (SNB) Tuesday late morning announced it is fixing the Swiss franc to the euro at a rate that will not be allowed to slip below euro 1.20 and says it is “prepared to buy foreign currency in unlimited quantities”.
Its action was accompanied by the toughest words to date on what it referred to as the “current massive overvaluation of the Swiss franc”, saying this “poses an acute threat to the Swiss economy and carries the risk of a deflationary development.” Reuters remarked that it had used “some of the strongest language from a central bank in the modern era”.
The SNB says it is “aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF1.20.”
The SNB statement notes that “even at a rate of CHF 1.20 per euro, the Swiss franc is still high and should continue to weaken over time. If the economic outlook and deflationary risks so require, the SNB will take further measures.”
The euro had lost more than 13 percent against the Swiss franc since the start of 2011 before the SNB’s decision. Bloomberg reports that later in the day “The franc snapped four days of gains versus the euro, dropping as much as 8.7 percent. It traded at 1.2025 at 3:42 pm in Zurich and was at 85.49 centimes versus the dollar.”
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.
BERN, SWITZERLAND – The high franc and world economic news are taking their toll on Swiss consumers’ sentiment, an official quarterly Swiss survey shows: “the confidence index declined to -17 in July (after -1 in April),” reports Bern. “In particular expectations for future economic development and future unemployment levels were far more negative than in April.”
Expectations for economic development were down 22 points out of 100 and expectations for rising unemployment were up 16 points, while expectations for family household’s personal financial situations slipped by 2 points. The only positive note was the possibility of setting aside money in the current environment, more positively appreciated in July than in April.
The Swiss franc remained at near-record highs against the dollar (CHF.75), the euro (CHF1.07) and the pound sterling (CHF1.23) Tuesday 9 August, after stepping down from record highs during the night.
Update 11:00 GENEVA, SWITZERLAND – Currency markets have reacted to the news of a US Congressional debt ceiling deal with volatility. The Sunday 31 July announcement of a deal was followed by a boost in the dollar, when then lost its gains against the Swiss franc, sinking to an all-time low Monday of CHF0.7729 to the dollar. The franc and the yen were safe havens Monday against the dollar, following news last week of slower growth of the US economy than that reported earlier.
Tuesday morning the dollar had climbed back slightly against the Swiss franc, to CHF0.7787, but the euro slipped below CHF1.10 Tuesday morning and also slipped against the dollar, over concerns about European economic growth slowing and the sovereign debt crisis.
Investors in currency, stock and other financial markets have been jittery recently over the political game going on in Washington to prevent the US from defaulting on its loans. The Financial Times writes 2 August that even the deal announced Sunday but still subject to a vote wasn’t enough to “Even though there was a sense of calm in Washington that the deal would be passed following Sunday’s agreement between the US president and congressional leaders, there was plenty of last-minute drama to keep investors on edge.
TSR reports Tuesday morning that the Swiss franc is, more than ever, a safe haven currency.
Links to other sites: Bloomberg, Financial Times
Geneva, Switzerland, where the price of chicken and wine haven't gone up, but the franc has, compared to the dollar and euro
GENEVA / ZURICH, SWITZERLAND – A double whammy of bad news for people hoping Switzerland might be getting cheaper: ECA, a multi-company owned employees service provide and Numbeo, a searchable database on global living costs, both put Geneva, Basel and Zurich high on their lists for the world’s most expensive cities, in June reports.
The only consolation is that the growing number of cost of living indexes vary considerably and therefore provide only a guideline to what it really costs to live in a place, with smart consumers finding ways to cut costs. All are based on samples, with some, such as ECA, carrying out surveys.
High Swiss franc penalizes cost of living indexes, mostly in dollars
The pricey cities come as no surprise to anyone who has watched currency fluctuations in the past year because the Swiss franc has appreciated hugely against both the euro and the dollar. Cost of living indexes, and these two are examples, tend to use the dollar as their base currency, against which prices are measured. “Of the European locations surveyed cost of living has increased the most in Swiss locations,” notes ECA, which ranked Zurich sixth, Geneva 8th, Bern and Basel 10th and . “In Switzerland, where inflation is low, it is the strong Swiss franc that has contributed to pushing Zurich up to 6th position globally from 10th.”
If you haven’t left Zurich in the past year, in other words, you won’t have seen much change in your grocery bill, despite the city climbing up in world price indexes.
ECA has added a lengthy article about the impact of currency fluctuations on expats around the world, noting that although the dollar recovered slightly in May it has depreciated more than 10 percent against the euro, without mentioning that the figure is even worse against the Swiss franc. The author notes that food prices tend to have less of an impact on expats than on locals because they spend a lower percent of expendable income on it.
The detail behind cost of living
©2011 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.
Dollar weakens against the Swiss franc
The Swiss franc reached another historic high against the US dollar in trading Tuesday, 15 March, as the dollar slipped below CHF0.92.
The Japanese yen also traded close to historic highs as Japanese firms appear to be bringing finance back to Japan to help firms deal with the problems caused by the massive earthquake and tsunami.
The Swiss franc benefited from its traditional role as a safe have in times of uncertainty and from the sound economic performance of the Swiss economy.
Switzerland has low inflation, a current account surplus, a balanced budget and comparatively low national debt.
The Swiss National Bank announces its interest rate policy Thursday 17 March and analysts are expecting rates to be kept near zero.
Losses in future years could touch shareholder gov’ts budgets
The SNB has head offices in Bern, shown, and Zurich
Update 11:45 Zurich, Switzerland (GenevaLunch) – The Swiss National Bank (SNB) is likely to post a CHF21 billion loss for 2010 as the result of exchange rate losses of CHF26m, it announced Friday.
But the federal government and cantons will receive their expected share of profits and dividends so their planned budgets will not have to be cut.
The SNB loss was softened by a CHF6b gain in the value of gold holdings. The central bank in 2009 has a profit of CHF10b. The bank notes that “despite the reduced allocation to the provisions for currency reserves, the SNB’s capital base continues to be robust, also by comparison with other central banks.”
The bank builds long-term equity capital by allocating money every year to the provisions for currency reserves.”The events of the past year have highlighted the fact that an adequate capital cushion is paramount for monetary policy independence. The SNB will therefore continue to pursue its long-term strategy of increasing its equity capital on an annual basis by means of allocations to the provisions for currency reserves.”
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.
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
World stock markets slumped Wednesday 23 June, after the initial boost they received from China’s announcement over the weekend that the renminbi exchange rate would become more flexible. Share prices fell on news from the US that sales of new homes were the lowest on record for one month in May 2010. Records used today have been kept since 1963.
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
© 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.
Zurich, Switzerland (GenevaLunch) - The Swiss franc reached €1.50 for the first time since March 2009 Friday 18 December, and it rose against the US dollar to 1.04. The move prompted observers to ask if the Swiss National Bank has stepped back from its policy, in place for more than six months, to weaken the franc.
Links to other sites: Bloomberg, Reuters, Swiss National Bank
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
Good or bad news, depending on which you are spending, buying: Swiss franc, dollar rates
Zurich, Switzerland (GenevaLunch) – The US dollar has slipped below parity with the Swiss franc for only the second time. The dollar fell below the franc 14 March 2008.
The Swiss franc, which has climbed in the past two days, was at 1.0030 against the dollar ($0.9993/CHF1 ) at 17:00 in Zurich Wednesday 25 November, but it dipped slightly to below parity at 18:00. Bloomberg attributes the change largely to the strength of the franc: “The franc has gained 1.6 percent against the dollar and 0.3 percent versus the euro in the past month as some investors bet that signs the economy is recovering may prompt the central bank to stop selling the currency.”
The US Federal Reserve Wednesday released minutes from its 4 November meeting, indicating that it was not overly concerned by the dollar’s fall.
Links to other sites: Bloomberg, FE.com, TheStreet.com, US Federal Reserve
We're all connected: Swiss economic health depends on the world, says SNB
Zurich, Switzerland (GenevaLUnch) - The Swiss National Bank’s (SNB) is guardedly more optimistic than in June about the outlook for the Swiss economy, it said Thursday afternoon 17 September in its quarterly report, but monetary policy will remain loose in order to stimulate the economy. The central bank revised its GDP (gross domestic product) forecast, saying it expects this to fall by between 1.5 and 2 percent, less steeply than forecast in June (2.5 to 3 percent). The key interest rate range remains unchanged at 0.0-0.75, “still aiming to keep the Libor within the lower end of this range, that is, at approximately 0.25%.” The Libor serves as an indicator of shifts in bank lending rates.
The SNB says it will continue to intervene in currency markets to keep the Swiss franc competitive internationally.
Zurich, Switzerland (GenevaLunch) - The Swiss National Bank 12 March announced that it is taking steps to lower the Swiss franc against the euro: it is investing in Swiss franc bonds issued by private borrowers, narrowing the range of the benchmark Libor interest rate to 0-0.75% with immediate effect in order to bring interest rates lower, and it is buyng foreign currency on foreign exchange markets. The Financial Times Friday morning leads with the currency exchange move news, citing several analysts who say Switzerland could be setting off a currency war.
