Swiss central banker: strong franc poses problem

April 17, 2011 - 0:0

WASHINGTON (Reuters) - Swiss central bank chief Philipp Hildebrand said on Friday the country’s very strong currency posed a problem and a considerable challenge for exporters.

“As a result of the strong appreciation, we do expect that growth will come down somewhat,” said Swiss National Bank Chairman Hildebrand at a conference in Washington. “We are looking at growth forecast for this year of around 2 percent.”
The Swiss franc was down against the dollar at 0.8933 per dollar CHF=, after nearing on Thursday the record high it hit on March 17.
Hildebrand said the country’s export sector has been remarkably resilient in light of the currency appreciation, but he warned that resilience came at the expense of margins.
“Essentially, exporters don’t want to give up market share and so they are prepared to squeeze their margins to take advantage of the global demand for their products,” he said.
“Over time this could be a problem if you squeeze margins for too long. That could have implications on potential growth,” he said.
The Swiss National Bank has kept rates ultra-low since the global financial crisis but solid economic fundamentals and the recent rate hike by the European Central Bank have made a Swiss move more likely.