Emmi Joins Swiss Industry Raising Red Flags as Franc Rally Bites
Emmi Joins Swiss Industry Raising Red Flags as Franc Rally Bites
(Bloomberg) --
The Swiss franc’s ascent is beginning to dim the outlook for local companies, with both cheese-maker Emmi AG and an association of machine-makers feeling its effect.
On Wednesday, the producer of Emmentaler cheese cut its sales forecast, citing the currency, which rallied to a two-year high against the euro on concerns about the weak global economy and the trade dispute.
The currency was also highlighted by Switzerland’s mechanical and electrical engineering sector, which reported a near 20% drop in orders.
“Risks such as global trade and currency conflicts, a chaotic Brexit and smoldering debt problems in certain EU countries have grown more acute,” Swissmem said in a statement. Demand in key export markets has cooled and “in the wake of these developments the Swiss franc has again appreciated, impacting the MEM companies’ price competitiveness.”
The group, which cited slower growth abroad, said industry orders fell 19.5% in the second quarter from a year earlier and further declines are expected. A Credit Suisse survey on the economic outlook plunged this month to the lowest since January, in part reflecting the gloomier global backdrop.
There’s a risk that the franc rallies even further if the European Central Bank boosts monetary stimulus next month. If, as expected, it cuts interest rates, investors bet the Swiss National Bank will follow suit and reduce its policy rate, already at a record-low -0.75%.
To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, John Bowker, Zoe Schneeweiss
©2019 Bloomberg L.P.