NEWS: Switzerland Abandons Currency Cap, Battering Watch Industry

The Swiss central bank unexpected lifted the cap on the value of the Swiss franc against the Euro, sending its currency soaring, further battering the downbeat watch industry.

Just hours ago, in a shock move, the Swiss National Bank (SNB) abandoned the cap on the value of the franc against the Euro, a step MB&F founder Maximilian Busser label a “gigantic pain”. Implemented in 2011 after the Swiss franc surged, the lifting of the cap batters Swiss exporters, exacerbating the situation of the Swiss watch industry. In the hours after the SNB’s announcement, the Swiss franc jumped to the highest level ever against the Euro – appreciating some 41% – and also strengthened against all other currencies. But this year, unlike in 2011, the Swiss watch industry is facing nearly flat growth and a very uncertain outlook. Because a strong franc makes Swiss products more expensive, Swiss stocks have slumped, particularly major exporters like the luxury watchmakers. All the industry’s prices have suddenly surged by 20% for no reason,” says Büsser, “Neither customers nor brands will benefit from it.”  Since the SNB’s announcement, shares in both the Swatch Group and Richemont have fallen over 15%. Swatch Group CEO Nick Hayek, quoted in Bloomberg, said, “Today’s SNB action is a tsunami; for the export industry and for tourism, and finally for the entire country.”

A chart from showing the nearly vertical jump in the Swiss franc against the Euro today

The consequences of the strong Swiss franc are twofold, given the slowdown in demand for watches. Swiss watchmakers have responded to the slowdown in business by introducing more affordably priced watches; that is now more difficult with the appreciation in the franc. Some watchmakers may even have to, horrors of horrors, raise prices in foreign markets, which would further put a damper on consumer lust for fine watches. The first major watch fair of 2015 begins next Monday in Geneva. This news gives the industry players in attendance a lot more to worry about. More about this on Bloomberg.

Back to top.

You may also enjoy these.

Speake-Marin Signs On Pierce Brosnan As Brand Ambassador

Pierce Brosnan, best known for playing James Bond, is now brand ambassador for Speake-Marin, bringing some Hollywood glitter to the independent watchmaker based in Switzerland but English in its heritage.

© Marco Grob for Speake-Marin

Independent watchmakers that aren’t Richard Mille rarely have brand ambassadors, much less genuinely famous personalities. So Speake-Marin‘s partnership is Pierce Brosnan is notable, having emerged from a chance meeting on the set of the upcoming film Survivor, where Brosnan plays a watchmaker, who also happens to be a skilled assassin by night. Director James McTeigue had recruited Peter Speake-Marin as a consultant to advise Brosnan on how to play a watchmaker – Peter disclaims any knowledge about bumping off bad guys. Peter’s encounter with Brosnan impressed the actor enough to compel him to acquire a Speake-Marin watch. 

The Speake-Marin Veshelda

As the pair struck up a friendship, the collaboration between the two came about. The partnership was less about commercial interest, given Speake-Marin cannot hope to match the commercial clout of major brands like Omega (who sponsored Brosnan when he was James Bond), but more about Brosnan’s deep respect for Speake-Marin’s craft. Brosnan will be a Speake-Marin ambassador till 2018. More info can be had from Speake-Marin.

Back to top.

You may also enjoy these.

Welcome to the new Watches By SJX.

Subscribe to get the latest articles and reviews delivered to your inbox.