As investors claim the Swiss franc is “worth its weight in gold” as a hedge against rising inflation, new forecasts have indicated that the currency is expected to increase in value dramatically. After the Swiss franc achieved parity with the euro at the end of June 2022, experts now believe that the exchange rate will fall as low as 0,90 rappen (cents) per euro.
According to the financial platform Cash, the value of the euro has continued to fall on exchange rate markets around the world. After equalling the value of the franc at the end of June 2022, last Friday saw the euro’s value drop to 0,96 rappen, with economists and Swiss banks predicting that it could go much lower.
Citing the latest report by American bank Goldman Sachs, Cash found that a euro valuation of 85 to 90 rappen could soon be a reality if the eurozone enters a recession - JP Morgan has predicted that the eurozone will go into recession by the end of March 2023. Thomas Gitzel, Chief Economist of the VP Bank of Liechtenstein, told Cash in July that a “90 rappen drop is not just theoretical, we are really heading towards this value in the medium term.”
The powerhouse countries of the eurozone are currently struggling with what Blick calls “economic headwinds,” with Commerzbank analyst Ester Reichelt explaining that, "The continued threat of gas shortages and high energy prices are weighing on growth prospects." As Russia reduces gas supplies to Germany, and with nations like the Netherlands seeing record levels of inflation, a hike in interest rates followed by a recession seems to be on the horizon for Europe.
However, while this may be good news for drivers taking advantage of cheaper fuel, or Swiss workers whose salaries will go further when shopping in German cities, it will mean higher export prices and costs for entrepreneurs and international companies in Switzerland. Blick noted that if the Swiss National Bank does not intervene to make the franc cheaper and more competitive, it is because they believe that the value of the franc is "correct" and the fight against Swiss inflation is more of a priority.