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By John Revill
ZURICH, March 18 (Reuters) - Swiss industry is urging the country's central bank to broaden its focus from fighting inflation to help them deal with the strong Swiss franc, which is eating into profits as the global economy cools and demand drops.
Over the past year, the safe-haven currency has appreciated significantly against the dollar and the euro, helping curb imported price pressures, but creating a headache for exporters already facing slacker business from Germany and China.
The pleas from industry come as the Swiss National Bank prepares to take its next interest rate decision on March 21 - having long met its core mandate of bringing inflation to within a 0-2% range.
"Once this legal mandate is fulfilled, the SNB also has a mandate to take the economic situation into consideration, and this naturally includes softening the impact of currency shocks for industry," said Stefan Brupbacher, director at Swissmem, which represents big manufacturers including engineering groups ABB, Siemens and lift-maker Schindler .
"We will never tell the SNB what it should do...yet we expect the SNB to take - within its mandate - the situation of the export industry into consideration."
The SNB's next rate decision is finely balanced. Meanwhile the mood within Swiss industry is fragile after the franc appreciated sharply in late 2023.
Martin Hirzel, a board member at Swiss farm machinery maker Bucher, said the franc's strength came at the "worst possible moment" as firms battled to win new orders after a weak 2023.
"And in this moment we have this appreciation of 5 to 7% against the euro which makes Swiss products more expensive, or companies see their margins disappear," said Hirzel, who is also president at Swissmem.
Foreign orders fell 9.1% last year, the organisation said, while a Swiss index of purchasing managers in manufacturing has been in contraction territory for a year.
MANUFACTURERS FRET
The franc's strength is a major worry, according to a recent survey by Swissmechanic, which represents more than 1,300 smaller manufacturers. Confidence in the sector is at its lowest level since the COVID-19 pandemic, the study showed.
Swissmechanic president Nicola Tettamanti said Switzerland had both very good products and a very strong currency.
"A major problem for us is when the euro or dollar drops very quickly against the franc," said Tettamanti, whose owns and manages Tecnopinz, a maker of precision components for machine tools. The company, near Lugano in southern Switzerland, is already feeling the slowdown.