Swiss stocks shed more than three percent minutes after trading began Friday, a day after the central bank stunned markets by scrapping its three-year bid to hold down the value of the franc.

Only 17 minutes into trading, the Swiss stock exchange’s main SMI index had lost 3.48 percent, after plunging 8.7 percent on Thursday.

The Swiss National Bank’s shock announcement that it was abandoning the minimum exchange rate of 1.20 francs against the euro temporarily sent the franc soaring nearly 30 percent on Thursday to 0.8517 against the common European currency.

The exchange rate eased back to 1.0199 Friday morning.

Fearful that a strong franc could dent earnings as it makes local products more expensive, investors have been offloading Swiss stocks.

All 20 companies in the SMI index were in the red Friday, with watchmaking giant Swatch tumbling more than six percent after plunging 16 percent on Thursday.

Luxury goods group Richemont, which owns such brands as Cartier and Jaeger-Lecoultre, saw its stock slump more 5.27 percent.

Swiss banks also felt the heat, with Julius Baer dropping 4.49 percent and Credit Suisse falling 3.87 percent.

The SNB’s decision had an impact beyond the country.

In Poland where 700,000 mortgages, or 40 percent of the total, are denominated in the franc, homeowners were facing sharply higher monthly repayments.

A New Zealand foreign exchange broker announced it was closing Friday after suffering “a total loss of operating capital” in the wake of the Swiss announcement.

The SNB had been defending the exchange rate floor since September 2011 in an effort to protect the country’s vital export and tourism industries, even buying massive quantities of foreign currencies to do so.

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The rate was introduced as the eurozone crisis sent investors to the safe haven currency. More recently, the Russian ruble crisis put renewed pressure on the franc.

But the bank, which less than a month ago vowed to enforce the exchange rate floor “with the utmost determination”, said Thursday it was no longer needed.

AFP

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