News
Economics

Soaring Swiss franc makes Basel more of a stretch for Europeans

Dealers from Switzerland acknowledge they need to be aware of buyers’ budgets at the fair

Switzerland has never been a cheap destination, but visitors and exhibitors at Art Basel this year—particularly those from the eurozone—are grumbling about the strength of its currency even more than usual.

In January, the Swiss National Bank decided to unwind the franc’s exchange-rate peg to the euro, resulting in a soaring Swiss currency. Previously capped at a minimum SFr1.20 per euro, a level at which it traded fairly consistently since 2011, the franc today is almost on a par with the euro, resulting in a near 15% cost increase for Europeans compared with last year. The impact has been made worse recently, as Greece’s exit from the zone seems more likely.

The difference is less dramatic against the US dollar and British pound, though these currencies also don’t stretch as far as they did before the peg was abandoned. “Even the bratwurst is unaffordable,” says Andreas Gegner of Sprüth Magers (B15).

The effect certainly adds an expense to being in Basel—particularly when it comes to hotels, transport and entertainment. A SFr110 bottle of Ruinart at the fair is now the equivalent of €105, rather than €92; the bratwurst €9.10 rather than €8.

But the exchange rate does not seem to pose too much of an additional problem for the overseas dealers on the floor. “The price of doing a fair in Switzerland is always an issue,” says the New York dealer Alexander Gray (T11). “Obviously, no foreign visitor welcomes the historically strong Swiss franc. But no gallery pulled out of the fair because of it and we do not see a decline in attendance by international collectors,” says Marc Spiegler, the director of Art Basel.

Buy your basics over the border For Swiss businesses selling to Europeans, currency fluctuations can hit hard. In May, Richemont—the Geneva-based luxury goods company—said that the revaluation of the franc against the euro accounted for a loss of around €686m for the year to March 2015. Outside of the bustling art fair environment, local businesses are struggling as people pop over the border to buy their basics from Germany and France.

The art dealers from Switzerland acknowledge that in the context of an international fair, they need to be aware of potential buyers’ budgets. Patricia Hartmann at Zürich’s Francesca Pia gallery (P3) says that it is particularly tricky for collectors from the eurozone who are committed to a Swiss artist (artists generally prefer to be paid in their local currency). She says that, for loyal buyers, the gallery’s younger artists were more “open to discussion” about offering a discount this year. Many galleries can offer buyers a choice; Victor Gisler of Zürich’s Mai 36 (P14) offers works in euros and US dollars, as well as the Swiss franc.

A soaring currency is not all bad news. “It’s good for Swiss collectors who want to buy art from elsewh ere,” says Stefan von Bartha (H13), who represents an international roster of artists through his Basel gallery. Plus, don’t forget, many of today’s wealthiest have Swiss bank accounts. On Tuesday, von Bartha sold two works by the German artist Imi Knoebel (priced at SFr130,000 and SFr45,000) to private buyers from Germany and Brussels who chose to pay in Swiss francs. “We thought the exchange rate effect would be more dramatic, but it’s not the case,” von Bartha says.