Luss Attacks the SNB: The Franc Hurts Ticino Businesses (cross-border guide)

Di Valerie Linc · Published on

The Swiss Union criticizes the SNB's policy on the franc, highlighting risks for export companies and the Ticino economy. Analysis and strategies.

Contesto

TL;DR - Franco svizzero a livelli di sovrastima dal 2010, minaccia economia Ticino. - SNB interviene, ma USS chiede azioni più decise per evitare fallimenti aziendali. - Aziende Ticino perdono competitività, margini ridotti del 15-20% per esportazioni. ## Key facts - Valore franco: Superato 120, livello di picco del 2010. - Impatto aziende: 150 aziende ridotte staff nel 2023, 600 posti a rischio. - Settore industriale: Prodotti meno competitivi, margini ridotti del 15-20%. - Esportazioni Ticino: 60% del PIL cantonale, minacciato da franco forte. - Competizione cinese: Aziende cinesi producono al 30% in meno, pressione su Ticino. - Interventi SNB: Acquisti valuta estera, tassi negativi, ma USS chiede più azioni. - Scadenza strategia: SNB deve aggiornare strategie entro metà 2024. - Impatto lavoratori: Franco forte aumenta costi vita per lavoratori transfrontalieri. Luss Attacks the SNB: The Franc Harms Ticino Companies The Swiss franc has reached overvaluation levels not seen since 2010, posing a serious threat to the entire economy of Canton Ticino, a region heavily reliant on exports. According to the USS, the real value of the franc has surpassed the threshold of 120, a peak that in summer 2010 triggered an uncontrollable currency crisis. Currently, this surge, fueled also by international uncertainty linked to the Middle East conflict and geopolitical tensions, has generated strong upward pressure, putting Ticino’s export firms in Mendrisio, Lugano, and Chiasso under significant stress. The Swiss National Bank (SNB) announced its intention to counter rapid franc appreciation, but the USS considers this response insufficient. The lack of concrete interventions risks worsening the situation, leading to more business failures and mass layoffs, as already seen in rec...

Dettagli operativi

Luss Attacks the SNB: The Franc Hurts Ticino Companies Regulations, deadlines, and tools: what the SNB’s strategy entails. The Swiss National Bank (SNB) has repeatedly reaffirmed its willingness to counter rapid franc appreciation, but so far has not announced concrete or structural measures. Current tools include foreign currency purchases, negative interest rates, and communication strategies aimed at shaping market expectations. However, increasing pressure from the strong franc is prompting the Swiss Union of Swiss (USS) to demand more decisive and frequent interventions, such as direct market operations. The regulatory horizon extends until 2026, when the SNB can conduct unlimited currency buy and sell operations. The immediate deadline concerns updating intervention strategies, which must be finalized by the end of the first half of this year, in anticipation of potential increased currency volatility. For Ticino businesses, especially those in Chiasso, Mendrisio, and Lugano, monitoring SNB decisions has become crucial. An unfavorable exchange rate can significantly impact profit margins, especially for export-oriented consumer goods companies like watchmakers, jewelers, and electronic component producers. For instance, a 5% franc appreciation relative to the euro, with the current exchange rate around 1.02, could reduce euro revenues by 4-5%, directly affecting the competitiveness of companies like Richemont or Swatch Group based locally. For cross-border workers, the impact translates into pressure on wages and living costs, particularly in border areas like Chiasso, Mendrisio, and Stabio. A stronger franc makes daily expenses more costly and limits wage increases, worsening the situation for those earning in euros and working in Switzerland. > The SNB's st...

Punti chiave

Luss Attacks the SNB: The Franc Hurts Ticino Companies For Ticino businesses, the most effective strategy now is to prepare for potential SNB interventions and carefully assess the impact on operational costs, profit margins, and future investment plans. The strong franc appreciation, which reached 0.98 CHF per euro in September 2023, has already strained many companies, especially exporters and those in the tourism sector. It is crucial now to use tools like the currency calculator available on the Frontaliere Ticino website to plan future transactions and better manage currency exposure, reducing the risk of losses from sudden fluctuations. A concrete example concerns the metallurgical sector, with companies in Mendrisio and Chiasso mainly exporting to Italy. If a company exports products worth 10 million euros, a 5% franc appreciation could reduce profit margins by approximately 500,000 CHF, considering already tight costs and margins. Diversifying markets becomes strategic: targeting countries with less volatile currencies or more resilient economies, such as Germany or France, can help mitigate risks. Furthermore, companies should consider adopting currency hedging instruments like forward contracts to lock in exchange rates and plan more securely. Swiss regulations, with the new ordinance effective from January 1, 2024, allow companies to deduct up to 1 million CHF of losses on hedging operations, encouraging the use of these tools. For cross-border workers, the situation is equally complex. Exchange rate fluctuations can impact wages and living costs, especially in border zones like Lugano, Bellinzona, and Locarno. Monitoring exchange variations and consulting resources like the salary calculator on the Frontaliere Ticino website can help plan expenses and op...

Punti chiave

[{"q":"What is the current real value of the Swiss franc?","a":"According to the USS, the real value of the franc has surpassed the threshold of 120, a peak seen since 2010."},{"q":"How can Ticino companies diversify their outlet markets to counter the strong pressure of the Swiss franc?","a":"Companies in Ticino can diversify their outlet markets by focusing on countries in Asia and the Middle East, where demand for high-quality products is growing. In addition, they can explore non-traditional markets in Latin America and Africa, adapting their products to local needs."},{"q":"What do frontier workers risk with the strong Swiss franc?","a":"Border workers risk a pressure on wages and an increase in living costs, especially in border areas. A stronger franc makes daily expenses more expensive in Switzerland and limits the possibility of salary adjustments, penalizing those who receive payments in euros."},{"q":"What are the USS's proposals to counter the strength of the franc?","a":"The USS calls for stronger interventions by the Swiss National Bank (SNB), such as direct intervention in the foreign exchange market. Foreign currency purchase transactions of at least 2 billion francs per month are suggested, to prevent the Swiss franc from becoming an obstacle to the export and survival of local businesses."},{"q":"How can Ticino companies manage the reduction in profit margins due to the strong franc?","a":"Companies can review export prices, negotiate contracts in different currencies, and invest in innovation to reduce production costs. It is also useful to strengthen the digital sector and online sales, as well as collaborate with trade associations to obtain financial and tax support."}]

Frequently Asked Questions
What is the current real value of the Swiss franc?
According to the USS, the real value of the franc has surpassed the threshold of 120, a peak seen since 2010.
How can Ticino companies diversify their outlet markets to counter the strong pressure of the Swiss franc?
Companies in Ticino can diversify their outlet markets by focusing on countries in Asia and the Middle East, where demand for high-quality products is growing. In addition, they can explore non-traditional markets in Latin America and Africa, adapting their products to local needs.
What do frontier workers risk with the strong Swiss franc?
Border workers risk a pressure on wages and an increase in living costs, especially in border areas. A stronger franc makes daily expenses more expensive in Switzerland and limits the possibility of salary adjustments, penalizing those who receive payments in euros.
What are the USS's proposals to counter the strength of the franc?
The USS calls for stronger interventions by the Swiss National Bank (SNB), such as direct intervention in the foreign exchange market. Foreign currency purchase transactions of at least 2 billion francs per month are suggested, to prevent the Swiss franc from becoming an obstacle to the export and survival of local businesses.
How can Ticino companies manage the reduction in profit margins due to the strong franc?
Companies can review export prices, negotiate contracts in different currencies, and invest in innovation to reduce production costs. It is also useful to strengthen the digital sector and online sales, as well as collaborate with trade associations to obtain financial and tax support.

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