Italy exports to Switzerland almost as much as it exports to all OPEC countries, and the trade surplus is substantial. Many Italian companies will therefore be happy with the strong appreciation of the Swiss franc. The Swiss, of course, a little less. Their manufacturing companies are in dire straits, and the Swiss National Bank isn't quite sure what to do. Yesterday the franc took another leap despite the bank making another large chunk of liquidity available to banks.
The next steps could be direct interventions on the foreign exchange market, capital controls or even the announcement of a reference target for the franc/euro exchange rate.
Meanwhile, large retail chains are asking exporters to lower their prices to reflect the strength of the franc; Migros and Coop have in some cases taken products from the shelves of companies that refuse to lower their prices in francs.
Source: Financial Times
