Swiss Miffed: Will Watch Prices Rise as Franc Soars?

Swatch Group chairman Nicolas Hayek didn’t mince words when he heard about the Swiss National Bank’s surprise Jan. 15 decision to remove its three-year cap on the franc.The decision is a “tsunami,” he said in a statement, and portends disaster for the watch industry and the “entire country.”If Hayek seems emotional, it may be because the Swiss franc hit a record high after the move, soaring 30 percent against the euro. It has since fallen, but at press time it was still up more than 10 percent against the dollar and the euro compared with Jan. 14.As the franc continues to soar, some watchmakers worry their costs will soar with it.The currency volatility “is a disaster,” says Amarildo Pilo, president of Pilo & Co., an independent watchmaker in Geneva. “I’m a specialist in the medium to high end. How can I be in that position if material [costs] are double?”But if

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