Until recently expatriates living and working in Switzerland have been enjoying the benefits of the high value of the Swiss Franc. However, the Swiss National Bank’s (SNB) decision to peg the franc to the euro now means that the value of the currency has plummeted by 8% and trips across the border for cheap goods will now become a thing of the past for expatriates living in Switzerland.
The decision to peg the Swiss Franc to the euro, which has come as a shock to many, has been implemented with the intention of easing the pressure on Swiss exporters and reigniting the local tourist industry, which is distressed as a result of the relatively high costs of goods and services in the region for those paying with foreign currencies.
Talking to one UK newspaper, The Telegraph, one expatriate banker described how expatriates had been taking advantage of the overvalued currency and shared his opinion of the decision to peg the franc to the euro:
“Most people head into France or Germany to buy things. I tend to go back to the UK because I know it better.
“When I first came out here I got 2.6 francs against the pound but expect it will go back to 1.8.
“I appreciate that something had to be done because people were getting restless and the currency was undoubtedly overvalued but I don’t think that pegging it was necessarily the right move.”
According to the SNB, despite the revaluation of the Swiss Franc, the value of the currency remained relatively high for the time being but should weaken over time. They also indicated that if this does not occur they would consider taking “further measures.”
The news did not come as a disappointment to all. Expatriates in the region who were paid in their home currency may just find that their cost of living is much more palatable.