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Switzerland to peg the value of its franc to the euro

Christopher Werth Sep 6, 2011
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Switzerland to peg the value of its franc to the euro

Christopher Werth Sep 6, 2011
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Adriene Hill: Switzerland just announced
it will begin pegging it’s currency to the euro. It’s a dramatic move for Switzerland, which has seen the value the franc skyrocket in recent months.

Reporter Christopher Werth has more from London.


Christopher Werth: We think of Switzerland churning out nothing but chocolate and Swatch watches. But Switzerland actually sells a lot of other things that aren’t as typically Swiss, with companies manufacturing everything from industrial chemicals to tiny screws used in German factories across the border. Or, make that Switzerland sold a lot.

With countries in the euro zone in turmoil, Carsten Brzeski, an economist at ING, says the Swiss franc quickly became a safe haven for investors worried about the stability of the euro. That sent the value of the Swiss franc soaring, and the cost of Swiss exports rising along with it.

Carsten Brzeski: Now we see that being a safe haven is not always a blessing for an economy because we see that a strong currency really make the export sector suffering.

The move has already sent the value of the Swiss franc plunging. But there are downsides, the biggest being that intervening in foreign exchange markets is expensive.

In London, I’m Christopher Werth for Marketplace.

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