Switzerland’s manufacturers are taking massive hits after the Swiss National Bank (SNB) unexpectedly abandoned the country’s exchange rate controls with the euro this morning.
The Swiss franc is now up about 14% against the euro, as of 11.40 a.m. GMT (6.40 a.m. ET). The suddenly strong franc is a massive problem for a lot of Swiss exporters. For example, a luxury item sold by a Swiss manufacturer is now 14% more expensive to a German customer.
Watch and jewellery manufacturers, as well as financial firms are getting knocked.
Swatch CEO Nick Hayek isn’t sitting on the fence. “Words fail me!” He said in an email seen by Reuters: “today’s SNB action is a tsunami; for the export industry and for tourism, and finally for the entire country.”
The Swiss Market Index, which monitors the biggest and most liquid stocks listed in the country, is down by 9.5% as of 12.55 p.m. GMT (7.50 a.m. ET), after dropping by as much as 16% earlier. Cie Financiere Richemont, which owns major brands like Cartier, Jaeger-LeCoultre and Montblanc, is the biggest loser, down by 15%.
Massive investment bank UBS is feeling the pain too, down more than 12% this morning.
Anyone who sells items produced in Switzerland abroad is likely to suffer from the move: Their buyers now need more of their own local currency (typically euros), and might look elsewhere instead.
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