Swiss Franc suffers broad-based weakness as low interest rates weigh
- Swiss Franc suffers broad-based weakness as rising global interest rates reduce its appeal.
- Low Swiss inflation gives the SNB less urgency to raise interest rates.
- USD/CHF heads for a weekly gain of over 2% amid broad US Dollar strength.
The Swiss Franc (CHF) is the worst-performing major currency this week as rising expectations of further interest rate hikes in the US and elsewhere make the lower-yielding Franc less attractive. Broad US Dollar (USD) strength adds to the pressure, with USD/CHF trading around 0.8395, near levels last seen in May 2025. The pair is up more than 2% this week heading into the weekend.
Swiss Franc Price This week
The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies this week. Swiss Franc was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.00% | 1.04% | 0.80% | 1.04% | 1.30% | 0.65% | 2.46% | |
| EUR | -1.00% | 0.05% | -0.21% | 0.04% | 0.39% | -0.35% | 1.45% | |
| GBP | -1.04% | -0.05% | -0.27% | -0.02% | 0.34% | -0.41% | 1.39% | |
| JPY | -0.80% | 0.21% | 0.27% | 0.24% | 0.44% | -0.13% | 1.61% | |
| CAD | -1.04% | -0.04% | 0.02% | -0.24% | 0.23% | -0.41% | 1.44% | |
| AUD | -1.30% | -0.39% | -0.34% | -0.44% | -0.23% | -0.73% | 0.96% | |
| NZD | -0.65% | 0.35% | 0.41% | 0.13% | 0.41% | 0.73% | 1.82% | |
| CHF | -2.46% | -1.45% | -1.39% | -1.61% | -1.44% | -0.96% | -1.82% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).
SNB’s low interest rates leave Swiss Franc vulnerable
The Swiss National Bank (SNB) keeps its policy rate at 0%, one of the lowest among major economies. Swiss inflation has picked up but remains within the SNB's 0%-2% range, giving policymakers less reason to raise rates. The Federal Reserve (Fed), European Central Bank (ECB), Bank of Canada (BoC) and Bank of England (BoE) have all raised rates this year to contain inflation. With inflation still above their respective targets, policymakers remain open to further tightening as they assess how much of the Middle East energy shock feeds through to wages and other prices.
US Dollar hits 19-month high as Fed rate hike bets firm
The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades near 103.40, its highest level since April 2025. Hawkish remarks from Federal Reserve (Fed) officials this week have renewed demand for the US Dollar as traders ramp up bets on further interest rate hikes. October CPI rose 0.4% MoM, while annual PPI inflation climbed to 6.5%, even as monthly producer prices rose less than expected.
Several Fed officials have made the case for further rate increases this week as the central bank works to bring inflation back to its 2% target. October CPI rose 0.4% MoM, while annual PPI inflation climbed to 6.5%, even as monthly producer prices rose less than expected.
On Friday, San Francisco Fed President Mary Daly said the Fed would “in all likelihood” need to raise rates and that it was hard to say whether policy was restrictive enough.
Chicago Fed President Austan Goolsbee said inflation would determine the path of rates and that the Fed still “has work to do” to bring it down. Their remarks echoed comments earlier this week from Dallas Fed President Lorie Logan, who called for at least two more quarter-point hikes.
According to the CME FedWatch Tool, traders fully price in at least a 25-basis-point (bps) rate hike in December, which would lift the Fed’s target range to 4.00%-4.25%.
Markets also see a small chance of a 50 bps move after Fed Governor Christopher Waller said before Tuesday’s release that a half-point hike could be warranted if October core CPI rose around 0.3% or more. The reading came in at 0.3%. Traders are also pricing in another hike in the first quarter of 2027.
SNB FAQs
The Swiss National Bank (SNB) is the country’s central bank. As an independent central bank, its mandate is to ensure price stability in the medium and long term. To ensure price stability, the SNB aims to maintain appropriate monetary conditions, which are determined by the interest rate level and exchange rates. For the SNB, price stability means a rise in the Swiss Consumer Price Index (CPI) of less than 2% per year.
The Swiss National Bank (SNB) Governing Board decides the appropriate level of its policy rate according to its price stability objective. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame excessive price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Yes. The Swiss National Bank (SNB) has regularly intervened in the foreign exchange market in order to avoid the Swiss Franc (CHF) appreciating too much against other currencies. A strong CHF hurts the competitiveness of the country’s powerful export sector. Between 2011 and 2015, the SNB implemented a peg to the Euro to limit the CHF advance against it. The bank intervenes in the market using its hefty foreign exchange reserves, usually by buying foreign currencies such as the US Dollar or the Euro. During episodes of high inflation, particularly due to energy, the SNB refrains from intervening markets as a strong CHF makes energy imports cheaper, cushioning the price shock for Swiss households and businesses.
The SNB meets once a quarter – in March, June, September and December – to conduct its monetary policy assessment. Each of these assessments results in a monetary policy decision and the publication of a medium-term inflation forecast.
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