GENEVA , Switzerland, Jan. 15 (UPI) -- The Swiss franc rose in value by 39 percent at one point Thursday, and stocks fell 14 percent after the Swiss Central Bank, in a surprise, ended the franc's ties to the euro.

Without warning to markets, the Swiss National Bank abandoned its three-year-old currency cap of 1.20 Swiss francs to the euro, a restriction to benefit exporters of Swiss products. The sudden departure lifted the value of the Swiss franc and triggered volatile swings in markets. The Swiss Market Index closed Thursday at 8,400.61, an 8.7 percent decline. The franc was up 14 percent against the Euro and the U.S. dollar, and closed the day at 1.15 to the dollar.


"It's completely crazy and a shock to everyone," Francois Savary of trhe Geneva investment firm Reyl & Cie told Bloomberg News. "Volatility in the currency markets is never very positive, because you add nervousness to a market that is looking for certainties. It makes you unable to forecast profits or economic growth."

"No one in Switzerland has hedged their forex (foreign exchange) exposure," Ralf Zimmermann, Bankhaus Lampe KG in Dusseldorf, Germany, added. "All companies trusted the SNB to keep its peg against the Euro. Now the rally in the Swiss franc against the euro will lead to a hit in the P&L (profit and loss) of Swiss companies."

The Bank's move came because it expects upcoming bond-buying by the European Central Bank, which has weakened the euro's value. The SNB likely decided it could not defend the self-imposed cap on the franc's value.

Nick Hayek Jr., CEO of the Swiss watchmaker Swatch Group, said in a statement the SNB's action "a tsunami, for the export industry and for tourism, and finally for the entire country."