The moment he got the call from a client telling him that the Swiss franc cap had been scrapped, wine importer Axel Caubet headed for the nearest currency exchange.
The surprise move by Switzerland’s central bank, which roiled equities and currency markets, also provided a windfall to the Geneva-based entrepreneur.
Caubet pays euros for cases of grassy Sancerre from France’s Loire River Valley and muscular Barolo from Italy’s Piedmont region.
His clients, a mix of restaurants, wine shops and private connoisseurs in the Lake Geneva region, pay him in francs.
“For me and my business it is a good opportunity,” Caubet, 34, said in an interview in front of a currency exchange kiosk on the Cours de Rive, a major shopping street in Geneva.
With the franc soaring to a record against the euro, Swiss-based importers and consumers are set to reap the reward of cross-border spending sprees in neighboring France, Germany and Italy. That will allow them to sidestep Switzerland’s notoriously high prices.
Club sandwiches in Geneva, home to private bankers, commodity traders and diplomats, sold for an average of $32.60 last year, making them the world’s priciest, according to Hotels.com.
The franc appreciated as much as 41 per cent to 85.17 centimes per euro, according to data compiled by Bloomberg.
Yesterday, in Zurich, the franc had given up some of those gains to trade at 1.02930 per euro. Against the dollar, it was up 15 per cent at 88.60 centimes.
Caubet, a native of France, lives in Switzerland where his company, Axel Votre Sommelier, sells about 300 bottles of wine per month.
While he welcomed the unexpected boost for business, he said he was concerned because the Swiss National Bank (SNBN)’s action reflected an investor search for a haven from geopolitical “instability” amid plunging oil prices, Russia and the Middle East.
“It is going to freeze investors in the markets,” he said.
Stocks in Switzerland fell the most in 25 years, with the benchmark Swiss Market Index slumping 8.7 per cent after the country’s central bank gave up its three-year policy of capping the franc at 1.20 per euro.
Swiss companies including Nestle SA (NESN) and Cie. Financiere Richemont (CFR) plunged in Zurich trading, while Swatch Group AG (UHR) Chief Executive Officer Nick Hayek said the country’s tourism and export industries were facing a “tsunami".
Bloomberg News, edited by ESM
