Word: francs
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Dates: during 1970-1979
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Except perhaps for gold, no monetary asset has quite the mystique of the Swiss franc. Since 1970, it has gained 74% in value against the dollar, more than 130% against the British pound and Italian lira, and even 23% compared with the almighty West German mark. The franc's strength is usually attributed to Switzerland's social and political stability and its reputation as a haven for funds of all sorts. Recently, the value of the Swiss franc has also been boosted by some economic successes that are the envy of most other nations...
Switzerland's inflation rate over the past year, for example, has been only 1.2%. Since January, consumer prices have actually declined. In spite of widespread fears that the rise in the franc would hurt exports by making them more expensive to foreign buyers, the country has amassed its first trade surplus in memory: $103 million in the first five months of this year. And unemployment stands...
Additional help for the pound came from Switzerland, which has been worried about losing export orders and tourists as a result of the rising value of its franc. Last week the Swiss moved to push the franc lower by making heavy purchases of other currencies, clamping a curb on speculative dealings, and cutting the central bank's discount rate from 2.5% to 2%-moves meant to make their franc less attractive for investors who want to flee sterling...
...watchmakers, or 21% of the industry's labor force, have lost their jobs in the past 18 months. More than two-thirds of those still employed are working less than a full day. Sales have been hurt by the global recession and the astronomical rise of the Swiss franc on world money markets, which has added 70% to the dollar price of a Swiss watch since 1971. But the most ominous development has been a marketing blunder: Swiss watchmakers failed to appreciate the sales potential of electronic digital watches...
...nervousness generated by the troubles of the franc and pound intensi fied the already alarming slide in the lira. In a single day, the lira fell from 842 to the dollar to 880; it closed at 875-down 27.6% from 686 as recently as Jan. 20. To boost government revenues and restore confidence in the lira, the government of Prime Minister Aldo Moro started a harsh austerity policy. Among other things, it raised taxes on auto sales, lifted the price of gasoline by 14.3%, to $1.73 a gallon, and raised the government bank lending rate a startling four points...