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The franc’s relentless rise is “undermining the competitiveness” of Swiss exporters, trade groups have warned, as companies from Roche to Swatch warn on the hit from the currency’s trade war rally.
The franc has risen 3 per cent this year, on top of a 14 per cent gain last year, taking it to 0.77SFr to the dollar for the first time since its shock 2015 appreciation.
The surge in the haven currency — driven by volatile geopolitics and a slide in the dollar — is ramping up the pressure on an economy where exports of goods and services add up to more than 70 per cent of GDP.
Pharma company Roche and watch maker Swatch Group reported hits to 2025 sales of about 5 per cent from the franc’s appreciation, while Cartier owner Richemont has also flagged currency headwinds.
Trade associations say the pain has been particularly acute for small and medium-sized companies that generate revenues abroad while incurring most of their costs at home.
“The Swiss franc’s appreciation against both the euro and the US dollar is increasingly undermining the competitiveness of Switzerland’s machinery, electrical engineering and metals industry,” said Nicola R. Tettamanti, president of Swissmechanic, which represents mechanical and electrical engineering SMEs.
While productivity gains can offset currency moves in the short term, Tettamanti warned that “this challenge cannot be offset indefinitely”. If current exchange-rate conditions persist, he said, they risk delaying investment decisions and, over time, weakening Switzerland’s industrial base.
Similar concerns are emerging in the chemical and pharmaceutical sector, one of Switzerland’s most important export engines. Roche, which generates most of its revenues outside the country, said it now expected a 4 percentage point hit this year.
Stephan Mumenthaler, director of scienceindustries, the chemical sector trade body, said the rise in cost pressures made it even more urgent to address the factors that Switzerland itself can influence, such as market access and innovation-friendly regulation.
Swiss exporters have faced a double whammy of tariffs and currency strength over the past year. Switzerland and the US agreed in principle last year to cap additional US tariffs on Swiss exports at 15 per cent, down from a rate of 39 per cent, but the deal was set out in a framework understanding rather than a fully binding treaty.
Officials on both sides are still negotiating the legal text, implementation and other details to turn that political agreement into a final, enforceable arrangement.
The FX hit has restrained Swiss stock prices, investors say, with the benchmark Swiss Market Index’s 2 per cent rise this year trailing the 4 per cent increase for the Stoxx Europe 600 index and near-5 per cent jump for London’s FTSE 100 index. This continued a pattern of Swiss equity underperformance from last year.
UBS estimates that for every 1 per cent gain in the franc across currency pairs, listed Swiss companies suffer a profit hit of an average of 0.9 per cent.
“The Swiss franc is a perpetual tariff for Swiss companies,” said Cedric Jacque, partner at Zurich-based Lloyd Capital.
A drop in valuations has led the asset manager to take bets on companies including dental implant manufacturer Straumann, construction and chemical group Sika and Swiss-Dutch chemical company DSM-Firmenich, leaving the firm with a record number of positions in Swiss stocks.
The franc’s surge has posed an increasing problem to the Swiss National Bank, which could cut rates to restrain the currency. However, as its benchmark interest rate stands at 0 per cent, cutting would mean a return to negative rates, which policymakers have said they do not want to repeat.
Swaps traders are putting a roughly 30 per cent chance that the SNB will cut below zero this year.
“Swiss equities were among the worst-performing markets last year because of the strength of the Swiss franc and the weakness of European importers,” said Charles-Henry Monchau, chief investment officer at Swiss bank Syz. “We need this to change, for sentiment to turn.”
