FRANK JORDANSGENEVA (AP) â¿¿ The Swiss franc hit record highs against both the dollar and the euro Monday, as worries about government debt among the major economies prompted investors to seek out what they consider to be safe assets to hold. The franc, along with gold, is traditionally considered to be protected from economic uncertainty, but its sudden and sharp rise in recent months has weighed heavily on Switzerland's export and tourism industries. Lawmakers and trade unions have called for urgent measures after the Swiss National Bank's decision last week to lower interest rates and pump money into the markets failed to dampen enthusiasm for the franc. The Swiss government held an emergency meeting on the issue Monday, saying afterward that an "energetic intervention" was necessary to weaken the franc, which was "significantly overvalued." It didn't specify which measures it would pursue though. Experts have suggested that the Swiss National Bank could announce a target exchange rate for the euro and the dollar, and aggressively print francs to achieve that price. Others have speculated that the SNB may join forces with the European Central Bank to stabilize the euro-franc exchange rate. However, Alan Ruskin, an analyst at Deutsche Bank, said it's unlikely that would work unless, or until, European authorities stabilize the bonds of countries like Italy and Spain. "The euro will continue its relentless march to parity (with the Swiss franc) without such stability," Ruskin said. By early evening in Zurich, the dollar was worth 0.7525 Swiss franc, marginally up from its earlier record low of 0.7485. The Swiss franc is 30 percent stronger against the dollar than a year ago. It's been a similar picture against the euro, which is arguably more important for Switzerland as most of its neighbors and biggest trading partners use the currency. The euro briefly touched a record low of 1.0618 Swiss franc after falling over 2 percent. In recent months, the euro has been hobbled against the Swiss franc by worries over Europe's debt crisis, which have recently centered on Italy and Spain.
The franc's continued strength further dented the shares of a number of companies Monday.Specialty chemicals firm Lonza Group saw the value of its stock fall 7.9 percent, while that of luxury goods company Richemont dropped 7.8 percent. Insurer Zurich Financial, watchmaker Swatch Group and engineering firm ABB Ltd. also suffered from selloffs that pushed the 20-strong SMI bluechip index in Zurich down 4 percent Monday. A senior official at the Economy Ministry has warned that the strength of the franc could lead to job losses by fall. The director of Switzerland's State Secretariat for Economic Affairs, Serge Gaillard, told weekly NZZ am Sonntag that growth is expected to weaken significantly in the second half of the year. Switzerland's jobless rate stood at 2.8 percent in July, his office said Monday.