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Swiss exports reach record high in 2018 despite strong franc

ZURICH (Reuters) - Swiss exports climbed to a record high last year, led by chemicals and drugs, despite a strong franc and geopolitical tensions, customs data released on Tuesday showed.

Exports rose a nominal 5.7 percent -- the strongest rate since 2010 -- and a real 1.2 percent to 233.1 billion Swiss francs (177.77 billion pounds).

Fuelled by a jump in gold jewellery for smelting, imports surged even more to surpass 200 billion francs, reducing the annual trade surplus to 31.3 billion francs.

Jewellery imports rose by two-fifths over the course of the year to 16 billion francs, as more gold jewellery -- mainly heading for smelting, or refining -- poured into the country, primarily from the United Arab Emirates.

The rise partially offset the fall that Switzerland, home to many of the world's biggest gold refiners and a major precious metals trading and vaulting hub, recorded in raw gold imports.

Switzerland's overall trade surplus in December narrowed from the month earlier.

The Swiss National Bank has adopted negative interest rates and said it is ready to intervene on foreign exchange markets to rein in the franc, which it calls highly valued and thus a threat to the export-led economy. A strong franc makes Swiss products more expensive abroad and competing imports cheaper.

SNB officials said this month they saw no reason to depart from their expansive policy given heightened political jitters in a fragile market.

All major sectors contributed to the export boom last year. The biggest contribution came from the chemical and pharmaceuticals sector, which includes Novartis, Roche and Lonza. Exports of medicines grew a nominal 8.9 percent during the year.

Shipments of machinery and electronics grew 4.6 percent, while watchmakers, including Swatch Group and Richemont, saw foreign deliveries expand by a nominal 6.3 percent.

Among the three main export markets, North America stood out with a surge of 11.6 percent, fuelled by record deliveries to the United States.

Exports to the United Kingdom fell 23 percent, the biggest decline in 30 years, while imports from Britain jumped 27 percent. Customs officials said declining drugs sales made up most of it.

Swiss drugs industry group Interpharma said exchange rates had played a role in the UK data because actual volumes of imports and exports had changed only marginally versus 2017.

(Reporting by Michael Shields; additional reporting by Brenna Hughes Neghaiwi; Editing by Keith Weir)