Source Credit : Portfolio Prints
Introduction
In early 2026, the Swiss franc (CHF) has strengthened sharply against major global currencies, notably the US dollar (USD) and the euro (EUR). The franc recently reached its strongest level in more than a decade against the dollar, and set new multi-year highs versus the euro amid widespread currency market volatility. This dramatic move has drawn intense attention from investors, central bankers, exporters, and global policymakers alike.
What’s Driving the Surge? Key Triggers
Safe-Haven Demand Amid Global Uncertainty
The Swiss franc is traditionally seen as one of the world’s most stable currencies — due to Switzerland’s political neutrality, strong fiscal position, and steady banking system. In times of geopolitical or economic stress, investors tend to “rush to safety,” boosting CHF demand. Recent events — ranging from political uncertainties to concerns over monetary policy — have reinforced this pattern.
| Currency Pair |
Change Last 12 Months |
| USD/CHF |
~-15.7 % |
| EUR/CHF |
~-2.1 % |
| CHF/JPY |
~+15–16 % |
| CHF/USD |
~+16.3 % |
| CHF/EUR |
~+3.3 % |
A Weakened US Dollar and Monetary Policy Signals
Global markets have been adjusting expectations around key central banks. A weaker US dollar, partly driven by softer economic data and shifts in Federal Reserve policy outlooks, has made other currencies comparatively stronger. This accelerated CHF gains especially versus the USD.
Eurozone and Global FX Realignment
The euro has also experienced volatility, influenced by European Central Bank (ECB) policy adjustments and regional economic slowdowns. In late 2025, ECB decisions triggered a stronger CHF against the euro, further pushing EUR/CHF toward new lows.
Structural Reserve Shifts and Investor Positioning
Currency reserve managers and institutional investors have increased CHF holdings as part of a broader diversification away from peaking USD risks. Switzerland’s current-account surplus and modest positive yields make CHF an increasingly attractive defensive allocation.
Magnitude of Appreciation: What the Numbers Show
- The Swiss franc has risen more than 3% in early 2026 alone and delivered a double-digit gain in 2025 versus the US dollar.
- Against the euro, CHF has touched levels not seen in years, with charts putting EUR/CHF near historic lows near 0.90-0.93.
- The USD/CHF currency pair recently traded below 0.78 — levels last seen in the early 2010s.
Economic Impacts
Inflation and Monetary Policy Challenges
Switzerland’s inflation is extremely low — about 0.1% recently — meaning that a stronger franc can further suppress prices and potentially push the economy toward disinflation. This complicates the Swiss National Bank’s (SNB) policy decisions.
While some central bankers might consider interest rate cuts or even returning to negative rates to counter excessive currency appreciation, these tools carry risks, such as overheating domestic markets or undermining financial stability.
| Year |
Type of Intervention |
CHF Movement |
| 2011 |
EUR/CHF floor set at 1.20 |
CHF sharply weakened vs euro |
| 2015 |
Sudden removal of EUR/CHF floor |
CHF surged ~20% in one day |
| 2020 |
Heavy FX purchases during COVID crisis |
CHF rise capped |
| 2022 |
Policy shift: tolerance for stronger CHF |
CHF strengthened vs EUR & USD |
| 2024–25 |
Minimal FX intervention |
CHF at multi-year highs |
Export Competitiveness Under Strain
Swiss exporters — including major pharmaceutical and luxury watch companies — suffer when CHF gains make their products more expensive abroad. This currency effect can erode profit margins and dampen growth, especially for firms earning revenues in foreign currencies but reporting in francs.
Recent corporate earnings, such as from Roche, highlighted how exchange rate effects sharply reduced reported growth even as underlying businesses performed well.
Swiss National Bank: To Intervene or Not?
The SNB has a history of stepping into FX markets to manage the franc’s strength, including significant interventions in past years. However, recent data suggests the central bank has scaled back intervention volumes compared to earlier large-scale operations — a sign of caution or reluctance to engage aggressively again.
- Intervene again to weaken the franc, or
- Rely on monetary policy levers, like rate adjustments, to influence exchange rates.
Both avenues carry political and economic trade-offs, especially when balancing inflation control with export competitiveness.
Conclusion
The recent surge in the Swiss franc reflects a confluence of safe-haven flows, macroeconomic uncertainty, monetary policy divergence, and investor positioning in a highly volatile global FX environment.
For Switzerland, this presents a policy conundrum: curbing excessive currency strength without derailing financial stability or fueling unintended economic stresses.
For global markets, CHF’s performance illustrates how currencies can act as early warning signals, revealing shifts in risk appetite and confidence across asset classes.
