In the last few weeks, the Swiss franc has achieved record valuations against the US dollar and the euro. Here’s why the value of Switzerland’s currency is rising, and what it means for residents and businesses.
In recent days, the Swiss franc (CHF) has reached new highs against both the euro (EUR) and the US dollar (USD). At midday on April 11, one franc was valued at 1,23 US dollars, its best valuation since 2011. Between April 10 and 15, the Swiss franc’s value against the euro has been maintained at 1,08 EUR to 1 CHF, its strongest performance since the end of 2023.
The new highs are seen as a reaction to the global insecurity caused by the tariff policies of US President Donald Trump. Despite pausing the most severe tariffs, the extreme import taxes placed on China and the flat rate tariffs imposed on goods from all other nations have sent financial markets into a tailspin.
Amid this uncertainty, TLDR News reports that major banks like US firm Goldman Sachs have advised its clients to start buying up Swiss francs. This has caused its valuation to soar in recent days, as confidence in the US economy deteriorates and the status of the US dollar as the world’s reserve currency comes into question.
In times of economic crisis and uncertainty, investors turn to what are known as “safe haven” investments like the Swiss franc. These assets are seen as able to either maintain their value or grow when economic instability is the norm.
There are multiple reasons why Switzerland and its currency are seen as a safe haven. The country's policy of neutrality, low inflation, robust economy and stable central bank all make the franc a safe and attractive prospect for when the markets spiral.
Starting with the positives, the strength of the franc is highly beneficial to those who live and work in Switzerland. For instance, those with Swiss salaries will benefit from cheaper prices when on holiday and when buying products and services from abroad.
"The strength of the franc has acted as a bulwark against imported inflation and makes us less dependent on what happens elsewhere, particularly in Europe and the United States, where inflation expectations are very high," economist John Plassard told Blick.
However, the franc’s strength also presents a major issue for Swiss companies who do business abroad, as their products are now more expensive for customers overseas. Therefore, a majority of business groups, most recently the umbrella organisation Swissmem, have called on the Swiss National Bank (SNB) to make the currency weaker.
In this regard, the SNB has been trying to weaken the Swiss franc for years without success, and has few levers left to try. Blick noted that the SNB has been selling francs and buying up foreign currencies to make the franc cheaper since October 2024, but this has not led to a major change.
Therefore, many in the media expect the SNB to try and lower interest rates to make holding francs less lucrative. However, with rates already set at 0,25 percent, the Neue Zürcher Zeitung has raised the prospect of negative interest rates - where investors and savers pay banks and financial institutions to store investments.