Swiss National Bank says its policy is paying off, expects 1% growth as economy stabilizes
ZURICH, SWITZERLAND – The Swiss National Bank Thursday 15 March issued a relatively optimistic quarterly report despite the Ides of March date. It confirmed that it is maintaining its CHF1.20 to the euro exchange rate cap, and is keeping in place the rest of its four-pronged policy:
- the SNB will continue to maintain liquidity on the money market at an exceptionally high level
- the target range for the three-month Libor (interest rate to prime banks) will remain unchanged at 0.00–0.25 percent
- the SNB will continue to maintain liquidity on the money market at an exceptionally high level.
Swiss franc, Swiss economy balancing act: the SNB will continue to intervene in currency markets (photo, Ellen Wallace)
“While the high value of the Swiss franc continues to present enormous challenges to the economy, the minimum exchange rate is having an impact. It has reduced exchange rate volatility and given business leaders a better basis for planning. There are growing indications that Switzerland’s economy is stabilizing. For 2012, the SNB is now forecasting moderate growth, at close to 1 percent,” the bank notes in a statement Thursday morning.
The central bank remains very cautious, however, noting that “In the foreseeable future, there is no risk of inflation in Switzerland. Compared to December, the inflation forecast has even fallen further. If developments in the international economy are worse than foreseen, or if the Swiss franc does not weaken further, as expected, downside risks for price stability could re-emerge.”
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.
NYON, SWITZERLAND – Pharmaceutical company Novartis is closing its site in Nyon as part of a restructuration that will involve eliminating 1,100 jobs in Switzerland.
The company is cutting a total of 2,000 jobs, with most of the rest in the US. The Nyon site employs 320 persons and 770 jobs will also go in Basel, the company’s head office. The company included general information about the restructuring in its third quarter results, published Tuesday 25 October:
“Novartis is announcing today additional cost reduction activity, which will be executed over
three to five years. Elements of the activity to include: reallocation of production within the
Novartis network resulting in closure of two sites in Switzerland and one in Italy; restructuring
the development organization largely in Switzerland and the US and relocating some research
activities from Switzerland to the US.”
Novartis results show sales up 12 percent in constant currencies, from $12.6 to $14.8 million and operating income up 15 percent, from $2.6m to $3m. Net sales grew by 20 percent with the weakness of the US dollar “with a 5 percent benefit arising from the weak US dollar against most currencies,” the company noted, while “The weakness of the US dollar, combined with the strong Swiss franc, resulted in a negative currency impact of 8 percentage points” on operating income.
Geneva's bankers face worrisome future in a shifting world
GENEVA, SWITZERLAND – The strong Swiss franc is back in the news 18-19 October, first with Swiss unions saying that they want the euro/Swiss franc exchange rate cap moved to CHF1.40, then the federal government announcing it will extend the period for reimbursement for partial unemployment and finally, the Geneva Financial Centre saying Swiss bankers may welll need to shift their expertise from private to institutional banking as they face a gloomy economic situation.
Bank profits will fall in 2011
Members of the Geneva Financial Center emphasized, speaking at their annual presentation for the media Wednesday, that a number of factors come together to create a worrisome scenario for the future. World markets are struggling, sovereign debt remains a major problem for a number of industrialized countries and the Swiss franc remains grossly overvalued. Profits at most banks will fall in 2011 as a result and belt-tightening will be in order, said Bernard Droux, president.
Partial unemployment due to franc: help for firms extended to 18 months
The Federal Council agreed Wednesday to extend from 12 to 18 months the period covered for companies to be reimbursed if they opt for partial unemployment as a solution in the face of the strong franc hurting their business.
The new measure becomes effective 1 January 2012.
Minimum wage should protect workers, say unions
Unia President Reno Ambrosetti Tuesday called for the Swiss franc to be capped at CHF1.40 rather than 1.20 against the euro, saying that 10,000 jobs are at stake. The major unions are calling for a minimum wage as fears grow that cheap labour will be imported at the expense of Swiss-based workers.
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 producer and import prices drop - View of the Basel port by Martin Ruetschi/Photopress
NEUCHATEL, SWITZERLAND – The Swiss producer and import prices fell sharply in August 2011 says a report published 14 September by the Federal Statistics Office, FSO.
The index for August slid 1.2% from the previous month as a result of a weak economy worldwide, lower prices for paper, oil, gas and chemical products, and the strengthening of the Swiss franc.
The current index is set at 98.5 points.
Prices for domestic products declined 0.8%, import prices fell 2%.
Compared to August 2010, the price index of the total supply of domestic and imported products decreased by 1.9%.
Following the release of the data, the Swiss franc extended losses against the US dollar gaining 0.39% to trade at 0.8838.
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.”
Past the roses and under the arches to the international wines tasting session at the exquisite 1908 Chateau Mercie
GENEVA, SWITZERLAND – Right: Swiss wine is mostly drunk inside Switzerland. Wrong: it’s local stuff that can’t compete internationally and anyway, it’s too expensive.
A wine tasting session offered to journalists covering the Vinea Swiss wine fair Sunday 4 September in Sierre showed good Swiss wines out-performing or equaling fine wines from other countries.
To the surprise of many, the Swiss wines were generally less expensive.
Swiss wine journalists (this includes me, despite my foreign background), whose mantra has been for some time that good Swiss wines are excellent value, felt vindicated, one commented afterwards. Now to convince consumers that when you’re splashing out for a fine wine, think Swiss.
The tasting session of international grape variety wines was hosted by Vinea for 18 journalists, most of whom are wine writers.
Twelve of them are from neighbouring Swiss countries, including France, Belgium and Germany. The purpose, said Vinea president Francois Murisier, who had selected the Swiss wines, was to simply see how Swiss international wines fared when tasted alongside comparable quality wines from major producing countries.
Swiss are famous for native grape wines, but what about their ability to make international grape wines?
Wine tasting: glasses ready for the wine, buckets for what we spit out
Switzerland has a very good reputation for its native grape variety wines, but how well, he asked, would wines made from grapes such as Syrah or Chardonnay, grown worldwide, do?
Murisier selected the Swiss wines from gold medal winners at various wine competitions. Two professionals, without knowing what wines Murisier had chosen, selected wines from other countries that had won at least 90 points out of 100 in international wine competitions.
All of the wines cost at least CHF20 and all were under CHF80, to avoid cheap or very costly wines that could skewer the results.
The cheapest was CHF23.50 and the most expensive CHF75.00. Most were in the range of CHF28-35.
If you’ve been buying the old cliché that Swiss wines can’t hold a candle to good European or New World wines and that Swiss wines are more expensive than those from neighbouring countries, this is the time to change your thinking.
Chardonnay, Sauvignon Blanc, Merlot and Syrah from around the world
We tasted four Chardonnays and four Sauvignon Blancs for the whites, followed by four Merlots and four Syrahs for the reds.
We knew that two out of each group were Swiss and our job was to a) guess what country they were from and b) give them points on a 20-point scale, with 15 as good and 20 as excellent.
The results
The Swiss Federal Council spent the day out of the office, instead holding their official meeting at the Chateau Mercier in Sierre
Update 20:00 BERN, SWITZERLAND – The Swiss franc rose yet again Wednesday 17 August, turning around after a dip at the start of the week against most major currencies. The shift comes in the wake of a Franco-German meeting that left investors lukewarm and efforts by the Swiss National Bank to reduce its strength that appear to have been viewed as not too onerous.
The currency developments were accompanied by the news late Wednesday that Switzerland could well have a 2011 budget surplus, rather than the deficit earlier predicted.
The franc finished the day in Switzerland at CHF.78 for the dollar, from a dollar high of CHF.80. The euro was trading at CHF1.1394 from a euro high of CHF1.1554 (figures, Reuters).
Tougher mortgage rules part of Swiss franc fallout
An undesirable side effect of the measures taken to rein in the Swiss franc is that banks are loaning out money for mortgages too easily, with very low interest rates, says the Federal Council. Strict rules about mortgage deposits are not being observed as much as they should, argues the council, so starting in January 2012 banks will face tougher restrictions and will be required to ask for larger deposits. The announcement was one of several linked to news of the federal surplus.
Central bank expands supply of liquidity to Swiss franc money market
The SNB announced early in the day that it was taking three steps, effective immediately, to “expand again significantly the supply of liquidity to the Swiss franc money market. In so doing, it is increasing the downward pressure on money market interest rates with a view to further weakening the Swiss franc exchange rate”:
- it aims to expand banks’ sight deposits at the SNB, from CHF 120 billion to CHF 200 billion
- to achieve this new target level as quickly as possible, it will continue to repurchase outstanding SNB bill
- for the same reason it will continue to employ foreign exchange swaps.
Budget surplus won’t have an impact on 2012 budget
The Swiss Federal Council, after a special summer session at the Chateau Mercier in Sierre Wednesday, announced that the 2011 budget is likely to have a CHF2.5 billion surplus instead of the CHF600 million deficit predicted earlier. The turnaround is due mainly to higher than forecast revenues, with companies’ profits higher than predicted in 2010 as the economic recovery proved to be stronger than expected. Government spending was also lower than predicted.
The new figures are based on accounts at the end of June 2011.
The 2012 budget was approved in May, at which point it was already clear that revenues for 2010 would be higher than expected, so the Federal Council says the new, mid-year predictions, will have no impact on the 2012 budget.
CHF2 billion industrial aid programme set up to avoid sending jobs abroad, reduce price fixing
The cabinet announced Wednesday it is setting aside CHF2 billion to rapidly boost industry, which is suffering from the role of the Swiss franc as a safe haven for foreign investors. The fund, the Federal Council acknowledges, is “large” and will be used to “strengthen industries that have been hit hard by the negative foreign exchange situation and to prevent jobs from going abroad”, including tourism.
The council will also seek a rapid change in the laws covering competition that would touch a number of price-fixing areas and it plans to provide Comco, the competition commission, with four additional posts for two years, to better enforce existing legislation.
Federal Council press release, details of the CHF2 billion industrial aid fund (Fre)
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.
ZURICH, SWITZERLAND – The Swiss National Bank said Wednesday morning 10 August it was taking new measures against the strength of the Swiss franc, following its intervention last week, which failed to stop the flow into the currency as a haven.It is not ruling out further action.
“The SNB aims to rapidly expand banks’ sight deposits at the SNB from currently CHF80 billion to CHF120 billion,” it says, to “accelerate the increase in Swiss franc liquidity” and the central bank will begin foreign exchange swap transactions, a monetary policy it last used autumn 2008.
The SNB cited, in a statement, the “massive overvaluation of the Swiss franc” which is says “poses a threat to the development of the economy in Switzerland and has further increased the downside risks to price stability.”
Swiss cabinet called in Hildebrand, central bank president, for special briefing
BERN, SWITZERLAND – The Swiss Federal Council says it is closely watching the record high Swiss franc situation, studying options and is ready to act if necessary, but it cautions against knee-jerk reactions that provide only short-term solutions. It issued a cautious statement Tuesday morning 9 August about the extraordinary meeting held by the governing group of seven Monday to review options in the face of market turmoil and investors pushing up the Swiss franc as a safe haven.
The group threw its support behind SNB (Swiss National Bank) President Philipp Hildebrand’s intervention in money markets last week and his promise to do more if the franc remains too high.
“It believes, as does the SNB, that the Swiss franc is clearly overvalued and that an energetic intervention is needed on the monetary policy front”, the Council said in the statement.
“We believe today that economic activity will slow down substantially in the quarters to come. The Federal Council is closely watching developments. It estimates that Switzerland’s position remains stronger than that of most of its neighbours but it is nevertheless aware of the need to watch the situation closely.”
China, Russia and India free trade deals are a focus
The Council noted a number of steps that have been taken since the start of 2011 to cushion the economy and business, noting in particular that it is keen to complete negotiations for free trade agreements with China, India and Russia before the end of 2012.
GENEVA, SWITZERLAND – The spread of London’s riots to more parts of the city and to other cities is the headline news Tuesday 9 August, not just in the UK but in most English-speaking countries, overtaking news of stock markets diving and the continuing fall of the dollar and the euro in currency markets. London’s Met Police are reported to be delivering people who are arrested to jails outside the city because it’s own are filled.
Stock markets:Carlos Slim, the world’s richest man, is calculated by Bloomberg to have lost $6.7 billion in the past week as markets dived amidst gloomy debt and credit rating news in the US and Europe. Wall Street fell more than 6 percent in trading Monday, the first day of trading post-Moody’s credit downgrading, and Asian markets continued their downward spiral Tuesday before easing, with the Swiss franc holding strong ($1.32 and euro.93) in what Reuters describes as “a global rout triggered by fears that political leaders are failing to tackle debt crises in Europe and the United States.” Bloomberg notes that Asian markets responded positively to talk of the US Federal Reserve intervening.
Links to other sites: BBC, Bloomberg, The Globe & Mail, Guardian, Irish Times, Sydney Morning Herald
ZURICH, SWITZERLAND – World stock markets collapsed Thursday 4 August as investors ran scared from bad news. The Dow Jones fell than 512.7 points: the 4.3% decline was the largest one day drop since 2009. European markets fell by 3% to 5% amidst worries over the European and American debts, as well as the expectation of poor figures on American growth.
UK firms lost £50bn in market value. Bank stocks were particularly hard hit, with many falling by more than 10%. Asian markets also fell sharply and European bourses are expected to open down on their closing prices.
American figures on non-farm employment are due at 12:30 GMT (14:30 Swiss) August 5 and could indicate that the US is heading back into recession.
The Swiss franc rose despite the Swiss National Bank chairman attempting to talk down the “absurd overvaluation” of the Swiss franc. The Euro was trading just below CHF 1.08, sterling below CHF 1.25 and the dollar under CHF 0.77. Gold slipped slightly as traders were forced to sell to meet losses on shares.
Swiss franc (photo, ©2011 Ellen Wallace)
Update 09:30 ZURICH, SWITZERLAND – The Swiss National Bank reacted Wednesday morning 3 August to the rapid rise of the Swiss franc, calling it “massively overvalued” and saying it will “very significantly increase the supply of liquidity to the Swiss franc money market over the next few days.”
“This current strength of the Swiss franc is threatening the development of the economy and increasing the downside risks to price stability in Switzerland. The SNB will not tolerate a continual tightening of monetary conditions and is therefore taking measures against the strong Swiss franc,” the central bank noted in a statement.
Specifically, the bank’s actions include:
- aiming for a three-month Libor as close to zero as possible, narrowing the target range for the three-month Libor from 0.00–0.75% to 0.00–0.25%
- very significantly increase the supply of liquidity to the Swiss franc money market over the next few days: expand banks’ sight deposits at the SNB from currently around CHF30 billion to CHF80 billion.
- with immediate effect, the SNB will no longer renew repos and SNB Bills that fall due and will repurchase outstanding SNB Bills, until the desired level of sight deposits has been reached.
The SNB says it is watching markets closely and will intervene again if necessary, noting that the combination of a worsening global economic outlook and sharp appreciation of the Swiss franc during the last few weeks has resulted in a substantial deterioration of the outlook for the Swiss economy.
ZURICH, SWITZERLAND – The Swiss National Bank’s (SNB) half-year report issued Friday is hardly cheering news at the start of a long national holiday weekend, with an interim consolidated loss of CHF10.8 billion francs thanks to the strength of the Swiss franc against major currencies, before allocation to reserves. “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,” the central bank says in a statement.
The SNB in 2010 showed a loss of CHF19.17b in 2010 and a profit of CHF9.96b in 2009.
Foreign currency position losses were some CHF9.9 billion, January to June, due mainly to exchange rate-related valuation losses of around
CHF 11.7 billion. The US dollar depreciated by 9.6 percent, the yen by 8.9 percent and the euro by 2.4 percent, according to the bank, and while there were some currency gains, they were not enough to offset these losses.
The gold price per kg at mid-year was about CHF40,800, resulting in a valuation loss of CHF 1.6 billion. The SNB’s gold holdings were unchanged, but they suffered a valuation loss of CHF1.6 billion: “Although the dollar price per fine ounce rose compared to the end-year
value, the price per kilogram fell from CHF42,289 to CHF40,799 as a result of the weaker USD exchange rate,” the SNB notes.
UBS stabilization fund reduced
The SNB loan to the stabilization fund that was created in late 2008 to bail out the country’s largest bank, UBS, was reduced from CHF11.8b
($12.6b) to CHF8.0 billion ($9.4b), during the first six months. “The total risk decreased from almost CHF14b to around CHF10b, the SNB reports, with the fund showing a half-yearly profit of $1.334b, representing a contribution of CHF 697 million to the consolidated result.”
Reserves to be allocated at the end of the year
Switzerland’s reserves are 25 percent in dollars, 55 percent in euros, 3 percent in GB sterling, 10 percent in the Japanese yen, 4 percent in Canadian dollars, with 3 percent “other”. By law, the SNB must set aside provisions to “maintain the currency reserves at the level necessary
for monetary policy”; the allocation will be made towards the end of the year.
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.
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
Source: Swiss National Bank, 16 June 2011 (click on image to view larger)
ZURICH, SWITZERLAND – Put the Swiss banking crisis in the past tense, with the Swiss National Bank’s new report on the state of Swiss banking showing that in 2010 the gross profit for the country’s 320 banks was CHF18.9 billion, a roughly 50 percent improvement over 2009.
The aggregate balance sheet for all Swiss banks in 2010 rose by 1.7% to CHF 2.71 billion.
The overall figures hide a significant difference, with 53 banks showing a loss, four more than in 2009. The loss was mainly due to a “substantial depreciation of tangible assets amounting to CHF 9.4 billion”, says the SNB.
The big banks played a key role in the improvement, says the SNB in a statement issued Thursday 16 June. The data “shows that this result was significantly influenced by the big banks, which reported improved trading income, higher extraordinary income and an increase in depreciation of tangible assets.”
Swiss franc’s appreciation reduced value of foreign balance sheet items
Dollar looses strenght vs the Swiss franc
Zurich, Switzerland (GenevaLunch) – The dollar soared briefly on foreign exchange markets Monday 2 May, following the announcement of the death of Osama bin Laden, but by early Tuesday it had slipped and the Swiss franc had reached a historic new high against the US currency.
The dollar was trading at CHF0.8619 before 08:00, Swiss news agency awp reports, with the Financial Times showing a rate of CHF1.00/$1.16 by mid-morning Tuesday.
The euro rose slightly against the Swiss franc, reports the Financial Times in an analysis of yesterday’s market movements.
This one is made of chocolate but real shoes cost more in March, as new models replaced February sale items
Zurich, Switzerland (GenevaLunch) – Swiss consumer prices rose 0.6 percent in March 2011, according to the latest CPI (consumer price index) figures released Wednesday 6 April by the Federal Statistics Office. Year-on-year inflation was 1.0 percent.
The annualized rate in February was 0.5 percent.
The main contributors to the rise in inflation were petrol prices, up 4.9 percent and new clothes and shoes hitting the stores after the sales, with an 8.5 percent increase in prices compared to February.
The Swiss franc continues to remain high against other major currencies, but according to Swiss National Bank (SNB) board member Jean-Pierre Danthine, interviewed by Basler-Zeitung shortly before the latest inflation figures were published, the Swiss economy is largely immune to the currency situation, with the very low interest rates providing domestic benefits. The European Central Bank will announce 7 April if it is raising interest rates and the SNB says it is closely watching international developments, one of the greatest risk factors for the Swiss economy.
Related stories: Reuters, preface to the 2010 Annual Report of the SNB, published 7 April 2011
Philipp Hildebrand, president, Swiss National Bank
Bern, Switzerland (GenevaLunch) - The case of Switzerland will give economists material to mull over, with Swiss exports showing a surprising leap in February, increasing by 10 percent. The machine industry and electronics led the way, with 20 percent growth.
Imports grew, but more “timidly” says the federal government.
Switzerland now shows a positive trade balance of CHF2.5 billion, double what it was a year earlier, and this despite concerns about the strong franc in recent months.
Philipp Hildebrand, Swiss National Bank (SNB) president, speaking to a group of journalists in Geneva Tuesday noon qualified Swiss exports as “remarkably resilient” but he warned that the Swiss economy will eventually see growth slow down as a result of the impact of the Swiss franc. The SNB 17 March revised upwards to 2 percent its forecast for growth of the Swiss economy in 2011, cautioning at the time that growth will slow down by 2012 due in part to the strong franc.
Hildebrand points to three risk areas for the Swiss economy: the high Swiss franc, the uncertain situation in the Middle East and the problems created by the earthquake and tsunami in Japan.
Bloomberg reports Tuesday that the Swiss franc “gained 12 percent over the last year versus the euro, the currency of its main trading partner, eroding exporters’ competitiveness. Against the dollar, it reached a record 88.52 centimes per dollar on March 17.”
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.
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
Zurich, Switzerland (GenevaLunch) - The Swiss franc rose again against the US dollar, the euro and the British pound, 3 December 2010. The dollar slipped back under the franc in the wake of pessimistic figures on employment, while the euro fell amid a background of fears over the credibility of bailout packages for Greece, Ireland, Portugal and Spain. The dollar ended the week at about CHF 0.973, the euro at CHF 1.305 and sterling at CHF 1.536. The historically high rates for the Swiss franc show the traditional role of the Swiss franc as a haven in times of uncertainty. They also help keep down Swiss inflation and interest rates but are making it hard for Swiss manufacturers and the tourist industry to compete.
Gold also rose above $1,400 in the wake of uncertainty and substantial buying from China.
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.
