Swiss franc hits record high against US dollar

In the afternoon of Tuesday, January 27, the Swiss franc hit a 10-year record high against the US dollar and strengthened against the euro.

Swiss franc hits record high against US dollar

On Tuesday afternoon, the US dollar was trading at 0,7701 Swiss francs. The currency of Switzerland also strengthened against the euro, trading at 0,9189 Swiss francs, according to Blick.

The shift comes as the US dollar in particular has weakened amid growing global uncertainty, US trade policies and concern over the independence of the US Federal Reserve. Furthermore, according to new data on the US economy, “American consumer confidence has fallen to its lowest level since 2014.”

Swiss National Bank yet to take action

In contrast, when currencies like the US dollar and euro weaken, the Swiss franc generally remains strong, as a “safe haven”. During global economic instability, the currency tends to maintain its value in part due to the country’s policy of neutrality, stable government, low inflation and strong economy.

The Swiss National Bank (SNB) could potentially decide to take action to avoid Swiss exports, such as pharmaceuticals, watches and manufactured goods, becoming too expensive for other countries to afford. Furthermore, while imports to Switzerland could get cheaper, inflation could drop below 0 percent (deflation) and impact the Swiss economy.  

The SNB has not yet intervened, according to Valiant Bank. The SNB is “less concerned about the absolute exchange rate level than about strong fluctuations [in the economy],” continues Blick.