The Swiss Franc jumped by more than 30% in value against other major currencies on Thursday following a surprise move by the Swiss central bank to scrap its cap on the currency. The Swiss National Bank (SNB) had previously capped the value of the Swiss Franc at 1.20 to the Euro.
Following the SNB surprise move, the Swiss Franc dropped from that level to 0.8052 against the Euro – sending shockwaves through the currency markets and the Swiss economy.
Watchmaker Swatch saw its share price slump 15%. Swatch chief executive Nick Hayek called the decision “a tsunami” for Switzerland’s economy. “Words fail me,” Hayek said, adding that SNB’s action was a “tsunami for the export industry and for tourism, and finally for the entire country.”
Shares in his company fell by as much as 17 percent – the biggest price decline in more than 20 years.
The benchmark 20-company Swiss Market Index dropped 10 percent, wiping 133 billion francs off its value.
Mark Haefele, chief investment officer of Swiss bank UBS, estimated that SNB’s surprise move cost Swiss exporters close to 5bn Swiss francs.