Firms feel Swiss pain now but more is coming

THE franc was steady yesterday thanks to a decision by the Swiss central bank to add massive liquidity to the market.

But it has been a very different story for the year so far – as markets have worsened, investors have piled into francs with an appetite mirrored only in their buying of gold.

Deemed a safe haven thanks to its distance from the euro and other crisis-addled currencies such as the dollar and pound, the franc has risen 9.5 per cent against the euro so far this year and 15 per cent in the past 12 months – while against the dollar, it has gained 15.5 per cent in 2011 and a whopping 24 per cent since last August.

That is causing real pain to companies and individuals earning money in international currencies but spending it in Switzerland. Holcim is just the latest large corporate to note the strong franc as a factor in its poor results.

The Swiss National Bank is currently stopping short of pegging the franc to the euro or establishing a floor to limit its strength. But after another day of stock market selling, it faces an uphill battle to avoid still greater rises.