Swatch Group shares plunged 15% today as the market reacted to the Swiss National Bank (SNB) abandoning a cap on the franc’s value against the Euro.
Switzerland’s myriad watch makers will face the choice of raising export prices or cutting income in Swiss francs as the value of the currency soared from the capped exchange rate of 1.2 to the euro, to 0.8.
It later softened to sit at just above 1 franc to the euro at lunch time on Thursday.
The Swiss Market index was down by almost 10% at 1pm, while other European markets were rising.
Bloomberg reported Swatch Group chief executive Nick Hayek’s exasperation at the move by the SNB. “Words fail me,” he said in an e-mail. “Today’s SNB action is a tsunami; for the export industry and for tourism, and finally for the entire country.”
Watches account for more than 10% of Switzerland’s exports.
Swiss bank UBS’s chief investment officer Mark Haefele, quoted by the BBC News web site, estimated that the move would cost Swiss exporters close to 5bn Swiss francs (£3.3bn), equivalent to 0.7% of Swiss economic output.