I read today lots of business occurs especially across the border. The amount of trade with the neighboring regions of Baden-Württemberg and Bavaria in Germany is about 20CHF Bn per year, the same as the total export of Switzerland to the US. Much of this trade is accompanied by strong capital flows: of about 2000 swiss firms operating in Germany, half of them are concentrated in these two regions (including giants like Swiss Re and Novartis). In the neighboring France (Rhône-Alpes region), Switzerland exports about 2.3 CHF Bn of goods including chemicals, plastics, electronics and electricity. This is the same value of export to India. While cross border investments relate to retailing and pharmaceuticals, there are also about 70,000 transfontaliers (50,000 are french working switzerland and 20,000 are Swiss living in France and working in Switzerland). In neighboring Italy (Lombardy) Switzerland exports about 5.2 CHF Billion of goods, including pharmaceuticals, foods... No wonder the SNB feels a bit nervous about the exchange rate vis à vis the Euro.
1 comment:
The SNB should not worry about the exchange rate as long as inflation is fine unless they are aiming at running a policy of undervaluation.
Swiss inflation is back at 1.5% and the imported part is actually running higher!
The Swiss Franc should be appreciating against the euro given the high surplus. In fact the real exchange rate against 40 trading partners looks half as impressive and points more to a normalization...so in my view there may actually still be some way to go
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