Joy and grief for the weaker franc

The euro has become significantly stronger lately compared to most currencies. What stands out, however, is the increase in value compared with the Swiss franc, which at the same time has weakened against other currencies, which in turn significantly increases the rash in the EUR / CHF exchange rate.

Since the abolition of the minimum exchange rate for the euro, the Swiss franc has seldom been above 1.10 francs per euro. For the current weakening he remains Swiss francs in a new range of about 1.15. This is a price decline of over 5% and thus the biggest drop in price in two years.

After companies and frontier workers have become accustomed to the extremely high franc exchange rate, they are suddenly confronted with a new situation.

Since the introduction of the Swiss franc minimum exchange rate by the Swiss National Bank, all have been able to rake with a strong but very stable exchange rate, which was mostly only slightly above the 1.20 mark. With the abolition of this apparently long-term unsustainable artificial course, Switzerland has experienced a shock. From one moment to the other, the price fell below parity and the Swiss franc was worth more than the euro for some time. The economy and politics were shocked. According to all economic rules, this new situation would have reverential consequences for the Swiss export industry, which would ultimately be reflected in economic growth.

Now the franc has become stronger again what the politics and the economy are looking forward to. Many, especially larger companies, the Swiss franc is not just a variable that defines whether domestic production is more expensive or not. It is much more complex. Large and medium-sized Swiss companies generate a large part of their sales abroad, but report in Swiss francs. With a strong franc, its income reported in Swiss francs and generated abroad falls by the change in the exchange rate. To avoid this situation, the company must either sell more or raise prices. Both are very hard to reach goals.

The question that arises in view of the new situation is how the Swiss exporting companies will react. It is quite possible that many customers will push companies to lower prices for Swiss products abroad if the companies have used the previous strength of the franc to price increase.

No matter what strategy these companies are pursuing, one thing is certain - for most, a weaker franc means a competitive advantage.

The very big companies that act more as international corporations, report in US dollars and also generate a large part of their sales in that currency. For these, the turmoil around the Swiss franc exchange rate is rather secondary.

Not everyone in Switzerland benefits from this situation. A large part of the population has already gotten used to a strong franc. This applies to all who fly and drive abroad or purchase the imported items. Above all, however, it affects the people who live and work in the border regions. For these, the articles bought in the bordering foreign countries will be more expensive and frontier workers will notice that the payout in francs in Euro is a few percent less.

We therefore encourage everyone to change money to a favorable exchange rate. At ExchangeMarket.ch you can save up to 2-3% per transaction by switching at a better exchange rate. Especially with larger amounts and with constant change one can save in this way considerable amounts. Instead of losing 2-3% on every transaction, and fly on a more expensive holiday, switch to ExchangeMarket.ch and fly on vacation for the money saved.