07 September 2011 15:39 [Source: ICIS news]
LONDON (ICIS)--Switzerland’s chemical and pharmaceutical industry is welcoming the introduction of a currency peg to help producers restore competitiveness to export markets, an industry association said on Wednesday.
Switzerland’s central bank, Swiss National Bank (SNB), this week announced a temporary minimum currency rate of Swiss franc (Swfr) 1.20 to the euro.
“The target must be pursued with absolute determination,” said Zurich-based scienceindustries, which represents Swiss-based chemicals and pharmaceuticals makers.
The group said Swiss producers can no longer offset impacts from the strong franc by boosting their productivity, cutting costs and extending weekly working hours.
The strong currency could push producers to move investments abroad, at the expense of employment in Switzerland, the group added.
SNB said even at Swfr1.20 to the euro, the Swiss currency is overvalued.
The bank said it is prepared to take “additional measures”, if and as required by the economic situation and deflationary risks.
“The massive overvaluation of the Swiss franc poses a risk for Switzerland’s economy and contains the risk of deflation,” it added.
Earlier this week, Switzerland-based specialty chemicals major Clariant cut its full-year earnings forecast because of unfavourable foreign exchange rate movements and a weakening global economy.
Meanwhile, scienceindustries called on the Swiss government to take additional measures to help offset the strong currency, including a reduction in companies’ tax burden, as well as an expansion of trade relations with countries such as China and India.
However, the group said the government should not provide subsidies for some companies or industries, while excluding others.
The group also said that plans to phase out nuclear power generation need to ensure that industrial producers have affordable and reliable alternatives.
Major Swiss chemical and pharmaceuticals producers include Novartis, Roche, EMS-Chemie, Lonza, Sika and Syngenta.
Read Paul Hodges’ Chemicals and the Economy blog
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