The Steadfast Swiss Franc: Steering Through the SNB’s Pivotal 2025 Challenge

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about 8 hours ago

Safe‑Haven Strength of the Swiss Franc

The franc remains the top safe‑haven, supported by political neutrality and strong banks. During the 2024 energy crisis it out‑performed the euro and dollar, highlighting its defensive role. Switzerland’s current‑account surplus above 10% of GDP and large FX reserves further bolster the currency.

SNB’s Dual‑Mandate and Policy Tools

The SNB follows a dual mandate: price stability and limiting excessive franc appreciation. Its tools include a -0.25% policy rate, conditional FX purchases, and a 900 bn CHF balance sheet. Heavy use of these measures can expand the balance sheet and spark inflation.

Market Drivers and Global Context

Rabobank cites diverging global policies, low Swiss inflation, and geopolitical risk as key drivers. High global debt and volatile commodity prices increase safe‑haven demand for the franc. The SNB must balance intervention pressure with economic stability as these forces persist.