In good news for those planning to shop or holiday abroad, the value of the Swiss franc has risen to a record high against the euro. Here’s why the currency’s value continues to increase.
As of November 22, those wishing to swap currencies would receive 1,08 euros for every franc in their pocket. As it stands, the value of the franc is the highest ever seen against the euro, eclipsing the previous record set in December 2023 (1,0761).
The new figures represent a significant turnaround in fortunes. When the "super euro" was launched to the public in January 2002, one Swiss franc would only give you around 0,67 euros. However, this phenomenon started to change following the financial crisis of 2008, the Eurozone crisis and the COVID pandemic. Thanks to economic instability and inflation in the European Union, caused by the war in Ukraine, the franc reached parity with the euro in the summer of 2022.
So far, analysts have attributed the recent record-high valuation of the franc to recent comments made by Russian President Vladimir Putin. After both the United Kingdom and the United States permitted Ukraine to use their leased long-range missiles on strikes in Russia, they responded on November 21 by launching a new hypersonic ballistic missile at a Ukrainian military facility.
In bellicose statements made after the incident, Putin warned that the attack was carried out because of the use of UK and US weaponry in Russia, adding that they were “ready for any developments.” This spooked international markets, who fear an escalating conflict between major powers.
Amid this turmoil, investors have flocked to buy Swiss francs, which is seen as a safe currency. The strength and stability of the Swiss government and economy, as well as its policy of neutrality, mean that many see it as a safe albeit less well-earning investment when the world seems teetering on the edge of the abyss.
The impact of a strong Swiss franc remains complex. On the one hand, families and individuals with salaries paid out in francs will be able to get more value for money when they travel or buy products and services from abroad. Indeed, World Radio Switzerland estimated that Swiss banks now offer 4.260 euros in exchange for just 4.000 francs.
By contrast, the valuable franc also makes Swiss products more expensive to buy abroad, hurting local firms and the wider economy. In the past, many entrepreneurs and business associations have called on the Swiss National Bank to cut interest rates and pursue other policies to make the franc less valuable.
However, with the European Union continuing to face slower economic growth and higher inflation than Switzerland, fellow at the Institute of Swiss Economic Policy in Lucerne Adriel Jost told Swissinfo back in August that we may be able to get 1,1 euros per franc in the future.