The surging dollar may give Swiss companies trading in the US and Asia some breathing space, after a bad start to the year for many firms hit by the strong franc. (SRF/swissinfo.ch)This content was published on March 17, 2015 - 10:35
When the Swiss National Bank announced on January 15, 2015 that it would no longer hold the Swiss franc at a fixed exchange rate with the euro, the franc soared and Swiss stocks fell.
Business has argued that the euro-franc exchange rate will hurt Swiss firms exporting to Europe and to Swiss tourism. It has already prompted many shoppers to cross the border to neighbouring countries, where goods are cheaper. But for some Swiss companies, like watch manufacturer Swatch, Europe is only a niche market, and the dollar exchange rate is more significant.
The strong dollar makes US goods and services more expensive compared with the offerings of competitors like Switzerland. In the last eight weeks, the dollar has increased in value by 14.4%.
The greenback has strengthened, in part, because the US economy is in better shape than that of many other countries. The dollar is also benefiting from expectations of a tighter monetary policy stance by the Federal Reserve as other central banks are focused on stimulating their economies.
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