Swiss exports buck franc strength with record monthly trade surplus

Switzerland posted a record monthly trade surplus in February, data showed on Tuesday, supported by strong sales abroad of its price-resilient pharmaceutical and chemical products.

Switzerland, home to two of the world's largest pharma firms, Novartis and Roche, ran a trade surplus of 4.07 billion Swiss francs ($4.2 billion) last month, the customs office said.

Exports rose 1.4 percent year-on-year in February in real terms when adjusted for working days to 17.6 billion francs.

The economy has responded robustly to a surge in the value of the Swiss currency after its central bank abruptly removed a cap on the franc against the euro in January 2015.

The franc, which had been capped at 1.20 per euro, pushed past parity with the single currency shortly after the announcement, sparking fears of a slump in exports to the euro zone, Switzerland's biggest trading partner.

The Swiss National Bank still describes the franc as "significantly overvalued", though it has weakened to around 1.09 per euro.

Despite the franc's strength, exports to the euro zone rose 4 percent in February, unadjusted for changes in working days, on the same period last year when firms would have just begun feeling the early effects of the franc surge.

One blemish was yet another monthly fall in watch exports from Switzerland. In February, sales abroad fell 3.3 percent year on year to 1.65 billion francs.

Watchmakers like Swatch and Richemont are less able to cope with the stronger franc by seeking supplies from cheaper locations. Swiss law mandates that a majority of parts for industrial products, including watches, has to be made in Switzerland to carry the coveted "Swiss Made" label.

Sales in Hong Kong, the biggest market for Swiss watches, have also been hit by China's economic slowdown as well as Beijing's anti-corruption campaign and clampdown on extravagant spending.

$1 = 0.9706 Swiss francs