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FRANC

Swiss central bank should curb franc’s rise: Swatch chief

The head of watchmaker Swatch on Sunday urged Switzerland's central bank to take measures to curb the appreciation of the Swiss franc, now at record heights against the euro and dollar.

“We must defend ourselves,” Swatch’s Director General Nick Hayek told the Sonntagszeitung newspaper in an interview published Sunday.

The National Bank of Switzerland (BNS) “must set an objective rate for the franc, for example a 1.35 (euro, $2.00) and defend it. This would at least be a clear signal” to the markets,” Hayek added.

He rejected claims that franc’s current record-high standing against the euro and dollar are due to the strength of the Swiss economy, which has attracted investors looking for a “safe haven” amid an intensifying eurozone debt crisis.

Rather, he said, the high rates are “a consequence of speculation.”

While Swatch on Thursday announced a net 24.5 percent rise in profits, Hayek said that trend would not last if the franc continued to soar.

“If the franc remains at these high levels high against the dollar and the euro, it will not be easy to maintain our profitability at current levels,” Hayek said.

The continued rise of the franc “will not only have very, very heavy consequences for us, but for all Swiss businesses and for tourism,” he said.

The franc hit record highs this weekend, brought on by the debt crises in Europe and the US, where lawmakers are working through the weekend to forge a compromise on raising the country’s borrowing limit.

On Friday evening, Swiss currency was trading at 1.1313 francs per euro, and 0.7852 against the dollar.

The BNS central bank had until 2010 intervened in exchange markets to limit the rise of the franc, but has since aborted that strategy after suffering major losses.

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ECONOMY

Why Switzerland continues to attract foreign companies despite the coronavirus pandemic

Despite the pandemic, 220 foreign businesses set up their offices in Switzerland in 2020.

Why Switzerland continues to attract foreign companies despite the coronavirus pandemic
Switzerland is a magnet for foreign companies. Photo by Valeriano de Domenico/AFP

While this number is 9 percent lower than in the previous year, these companies have created 11 percent more new jobs — a total of 1,168 — than in 2019. Most of the new jobs were created by companies from China, the United States and Germany.

About 3,600 more positions are expected to be offered by these enterprises in the next three years, according to data from SRF, Switzerland’s public broadcaster.

In fact, Switzerland is one of the very few countries that have been able to attract international companies to its shores in 2020, a notoriously bad year for the global economy.

READ MORE: Why Switzerland’s economy is on the up despite the coronavirus pandemic

Experts believe this is due to the country’s strengths, including political, economic and financial conditions.

“Even in a time of crisis, Switzerland scored thanks to its stability, predictability and security”, said Patrik Wermelinger, member of the executive board of Switzerland Global Enterprise (SGE), which promotes the country abroad on behalf of the federal government and the cantons.

There are also other reasons that had prompted foreign companies to come to Switzerland in 2020, despite the economic uncertainty and travel restrictions.

“Protection of legal rights, freedom, and personal responsibility are stronger in Switzerland than in many other countries, even in times of pandemic”, said SGE’s co-president Walter Schönholzer.

Switzerland’s attractiveness is also boosted by studies showing the country’s economy remains the strongest in the world.

Even though the health crisis plunged Switzerland’s economic activity into a “historic” 8.2-percent slump in the second quarter of  2020, the country still boasts the world’s most resilient economy, according to research by an insurance and reinsurance company Swiss Re. 

The International Monetary Fund (IMF) expects a 3.5-percent rebound in Switzerland’s gross domestic product (GDP) in 2021.

It said Switzerland’s economy absorbed the shock of the pandemic better than other European countries and it “has navigated the Covid-19 pandemic well”.

IMF added that Switzerland’s “early, strong, and sustained public health and economic policy response has helped contain the contraction of activity relative to other European countries”.

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