Swiss unemployment to rise on strong franc

Swiss unemployment would rise if the country's currency fails to weaken to levels last seen in early July, the head of the state secretariat for economy's labour division said in remarks published on Sunday. Serge Gaillard said that even with the scenario of a robust economy and an exchange rate of 1.20 to 1.30 franc against the euro, the secretariat, the economics ministry's data collection and forecasting arm, expected the unemployment rate to rise in the autumn, he said. "The euro now costs less than 1.10 franc," Gaillard told Swiss newspaper NZZ am Sonntag. Swiss unemployment reached 2.8 percent in June, a 2.5 year low. The Swiss franc has strengthened to records against the euro and the dollar amid persistent fears over the ability of advanced economies to service their debt. On Wednesday, the Swiss central bank assessed that the franc was "massively overvalued" and threatening the export-led Swiss economy, and took measures to try to lower its value -- saying it would increase the supply of liquidity and cut its already low benchmark lending rate, The measures proved to have a limited effect, as the franc is now trading at 1.09 against the euro. Citing anonymous sources, NZZ am Sonntag said the Swiss government would soon take further action to dilute the impact of the strong franc on the domestic economy. Among these measures are plans to tighten anti-cartel rules, so that importers currently benefiting from the strength of the Swiss currency, would be forced to pass on their savings to consumers, said the newspaper. This could help to halt the exodus of Swiss shoppers, many of whom are heading to bordering Germany or France to do their weekly grocery shopping.