Swiss watchmakers urged the central bank and the government to support exporters by curbing the strength of the country’s currency as overseas sales slump.

“With inflation currently well below 2 percent, the Swiss National Bank has room to manoeuvre and act on the foreign exchange market,” the Federation of the Swiss Watch Industry and the Employers Federation of the Swiss Watch Industry said Tuesday. “An ad hoc and more reactive approach would also make it possible to reduce the volatility of the franc.”

The nation’s watchmakers are grappling with a drop in demand for costly timepieces. After record shipments by value in the past three years, watch exports dropped by 2.4 percent in the first seven months of 2024. Some brands and several components makers have resorted to government-supported work reductions to avoid permanent job cuts, Bloomberg News has reported.

With brands ranging from Rolex to Patek Philippe and luxury conglomerates including Swatch Group AG and Richemont that each own a slew of brands, the industry includes some 700 companies employing about 65,000 people. It’s a key pillar of the Swiss economy, where exports account for 55 percent of GDP.

The watchmakers are the second prominent Swiss industry lobby to call on the central bank for measures to weaken the franc. Early last month, technology manufacturers’ association Swissmem said the sudden appreciation in the currency is threatening a vulnerable recovery for overseas sales seen in recent months.

Two interest rate cuts by the Swiss National Bank have so far failed to prevent the franc from again approaching an all-time high against the euro that was last reached in the final days of 2023. Officials have repeatedly said that the currency’s strength was crucial in restraining Swiss inflation, which peaked at about a third of the eurozone’s highest level.

SNB officials will meet for the next rate decision on Sept. 26.

Subcontractors and makers of entry-level and mid-range priced watches are being hurt the most by the drop in demand, the watch trade group said. “The negative forecasts for the end of 2024 could prove highly problematic for some players in the sector.”

Faced with the sudden drop in demand, many watch companies have had to resort to short-time working, extended summer closures and job cuts, the industry group said.

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The Luxury Watches Downturn, Explained

The Swiss watch sector’s slide appears to be more pronounced than the wider luxury slowdown, but industry insiders and analysts urge perspective.