Switzerland's central bank came under fire at home and abroad Friday after scrapping efforts to stop the overheated franc rising, throwing global markets into chaos and bankrupting several foreign exchange traders.
The Swiss National Bank announced on Jan 15, 2015 that it was abandoning the minimum rate of 1.20 francs against the euro that it had been defending for more than three years
A brokerage firm in Britain and another in New Zealand declared insolvency, homeowners while exporters in Switzerland warned they too could be put out of business by the Swiss National Bank's sudden decision.
"From an economic standpoint, this move is incomprehensible at the current time," the Swiss Business Federation said, warning the country's vital export and tourism industries would suffer.
Swiss newspaper Le Temps charged in an editorial that the central bank was "guilty of naivety" and questioned if it had forgotten the stabilising role it should play on the markets and the economy.
The SNB had "put its credibility at risk", the newspaper said, while the Tribune de Geneve said the bank was "sinking the Swiss economy".
A rout on Swiss stocks continued, with shares on the main SMI index tumbling 5.96% on Friday, a day after plunging 8.7% -- the Swiss stock exchange's steepest fall since 1988.
The SNB had caught markets off guard Thursday with its shock announcement that it was abandoning the minimum rate of 1.20 francs against the euro that it had been defending for more than three years.
The Swiss currency immediately gained nearly 30 percent against the euro, before stabilising at around parity -- which is still 15 percent higher than Wednesday's rate.
Swiss public broadcaster RTS calculated Friday that the new exchange rate meant the value of the central bank's own massive foreign currency reserves had dropped by 60 billion francs overnight.
- Watchmakers' warning -
The boss of a small watchmaking company H. Moser & Cie underlined the impact of the SNB's move in an open letter addressed to central bank chief Thomas Jordan, warning that he may have to move his business out of Switzerland.
"Over 95 percent of our watches are sold to people outside of Switzerland, and the first retailers called the same day to cancel orders," Edouard Meylan wrote.
"In fact, one thought crossed my mind: why not just move two kilometres into Germany and continue business as usual in the EU?," wrote Meylan, whose company employs 55 people.
Watchmakers are particularly jittery as the SNB's decision comes just ahead of the luxury industry's annual trade show, when buyers travel to Switzerland to place orders for the entire year.
Swiss watchmaking giant Swatch took a heavy beating, seeing shares fall more than seven percent Friday after plunging 16.4 percent a day earlier, when company chief Nick Hayek said the SNB had sparked "a tsunami."
An organisation representing the Swiss textile industry, which exports 75% of its production to the European Union, also voiced alarm and warned the SNB move "could have consequences for the labour market."
Exporters are not the only ones fretting. Domestic retailers could also be hurt as consumers flock to neighbouring countries like France and Germany to shop for cheaper goods, including daily necessities.
In the northern city of Basel, local authorities announced extra trains running to Germany on Saturday, anticipating a rush of cross-border shoppers.
Switzerland's employers organisation cautioned that such "purchase-tourism" would likely skyrocket.
"It's like Christmas all over again!" Vanessa, a 28-year-old hospital orderly, told AFP outside a Geneva exchange office, while contemplating whether to swap all her Swiss franc savings into euros.
- Tourists hit -
Tourists arriving in Switzerland were less enthusiastic.
"With an exchange rate like that, we won't be coming back to Switzerland anytime soon," a Scottish tourist in his 60s who gave his name only as Bornsadi told AFP as he arrived at the Geneva airport Friday for a week's holiday.
"We prefer countries where the cost of living is not so steep," he said.
Russian tourist Alexei, 45, was meanwhile all smiles, since he had just wrapped up his week in the Alpine nation.
"I'm glad to be so lucky to be ending my holiday now... The prices were already expensive, but now it's impossible," he said before getting on his flight back to Moscow.
Swiss banking giant UBS estimates that the SNB's decision would deliver a severe blow to economic growth, and slashed its forecast to just 0.5% expansion this year from its previous estimate of 1.8%.
Casualties were also piling up outside Switzerland, with British broker Alpari UK and New Zealand foreign exchange broker Global Brokers NZ announcing the sharp rise in the Swiss franc was forcing them into bankruptcy.
In Poland, where 700,000 mortgages, or 40% of the total, are denominated in the franc, homeowners were meanwhile facing sharply higher monthly repayments.