Swiss exporters including Swatch Group AG and Richemont slumpedin Zurich trading after the central bank's decision to scrap itscap on the currency saw the Swiss franc jump more than 16 percentagainst the dollar and euro.

“Words fail me,” Swatch Chief Executive Officer Nick Hayek saidby e-mail. “Today's SNB action is a tsunami; for the exportindustry and for tourism, and finally for the entire country.”

Holcim Ltd., the world's biggest cement maker, slid 11 percentat 1:28 p.m. in Zurich. Watchmaker Cie. Financiere Richemont SAtumbled 15 percent and Swatch 14 percent. The benchmark 20-companySwiss Market Index dropped 10 percent, wiping 127 billion francs($145 billion) off its value.

A strong franc is a challenge for exporters like Swatch andsmall- and mid-size companies with factories in Switzerland, whereshop-floor workers earn some of the highest wages in Europe.Timepieces make up more than a 10th of the country's total exports,led by brands including Rolex, Swatch's Omega and Richemont'sCartier.

The Swiss franc surged as the Swiss National Bank unexpectedlyremoved the cap of 1.20 francs per euro, concluding that it was nolonger justified. That ended a three-year-old policy designed toshield the economy from the euro area's sovereign debt crisis.

“We are an export-oriented business,” said Andrew Weiss, aspokesman for Allschwil, Switzerland-based Actelion Ltd.,Switzerland's third-biggest drugmaker. “We have a certain amount ofrevenues that come from the U.S. Together with the Europeanrevenues that will be under pressure.”

While Actelion slumped 13 percent in Swiss trading, thecountry's biggest drugmakers, Novartis AG and Roche Holding AG,both dropped 12 percent. Parity between the franc and euro will cutabout 1 billion francs or 6 percent from Roche's core earnings,analysts led by Michael Leuchten at Barclays Plc wrote in a notetoday.

“Clearly Roche, Novartis profits suffer,” Leuchten wrote.

Novartis, based in Basel, declined to comment. Roche said thatwhile the company generates significant revenues in the euro zone,it also incurs an important part of its costs in euros, includingexpenses for research and development, production andpersonnel.

Market Turmoil

“This helps mitigate the currency impact on Roche's cash flow,”Nicholas Dunant, a spokesman for the Basel-based company, said inan e-mail.

Thomas Cueni, secretary-general of Interpharma, Switzerland'spharmaceutical group, said the SNB's decision had caught theindustry by surprise, but it was better positioned to weather theimpact than some other parts of the economy because of itsgeographical diversification.

“There's a bit of regret because over the last few years, theminimum brought predictability and stability to the industry inSwitzerland,” Cueni said by phone from Basel. “As you can see fromthe market reaction, now we have turmoil and volatility.”

Nestle SA, the world's largest food company, which gets about 98percent of its revenue from outside Switzerland, declined as muchas 11 percent, the biggest intraday drop since October 1997.

Luxury goods makers are also vulnerable after the advance in thefranc.

The Swiss watch industry was already reeling from what probablywill rank as the second-worst annual performance since 2009.Full-year data isn't out yet, but exports of Swiss watches rose 2.3percent in the first 11 months of 2014, decelerating from a growthrate that peaked at 22 percent in 2010.

“Exports from Switzerland to the rest of the world suffer fromthe negative currency effect,” Sylvia Kaelin, spokeswoman forKilchberg-based Lindt & Spruengli AG, the world's biggestpremium chocolate maker, said by e-mail. “We're trying tocounteract these challenges through efficiency and volumegrowth.”

The alarm over the central bank's decision wasn't confined toexporters as the franc jumped to a record against the euro and roseto its highest in more than three years against the dollar.

Jobs Threatened

“The SNB is playing with fire,” the Social Democratic party saidin an e-mailed statement. Switzerland is at risk of “catastrophicconsequences for the economy and jobs.”

Pressure on the cap increased in recent months as speculationthe European Central Bank was preparing a program of bond buying,or quantitative easing, weakened the euro. The SNB also cut itsinterest rate to minus 0.75 percent.

The challenges faced by Swiss exporters will be compoundedbecause most won't have hedged against a stronger franc, said RalfZimmermann, an equity strategist at Bankhaus Lampe KG inDusseldorf, Germany.

“No one in Switzerland has hedged their forex exposure,” he saidin a phone interview. “All companies trusted the SNB to keep itspeg against the euro. Now the rally in the Swiss franc against theeuro will lead to a hit in the P&L of Swiss companies.”

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