Businesses Do Not Panic Over CHF Exchange Rate

The exchange rate of the CHF against the EUR continues to fall

                Swiss franc exchange rate is continuing to get stronger in recent months. During the first year of the COVID-19 pandemic CHF appreciated a lot of thanks to its reputation of safe-haven asset. Many investors tend to buy Swiss francs in times of economic, geopolitical turmoil. Even heavily interventions of the SNB that tries to stop CHF exchange rate from getting too strong in order to keep inflation within target and aid export-driven economy, didn’t seem to have a lot of impact on the CHF price. Last year the situation clamed down a bit and the SNB didn’t intervened that much. Vaccination program gave hope for investors and triggered more risky mood among markets. However, this year the CHF exchange rate is again going very strong. Euro versus Swiss franc hit the six-year low. CHF/EUR briefly touched 1.03 level, the strongest since 2015. Looking at past months, the rate of euro has been going down and CHF up almost non-stop since September. Reasons for that is relatively low inflation in Switzerland, comparing to other European countries. Inflation rate in Switzerland was at jus 1.3% in December versus around 5% in the eurozone. The lates events highly influencing CHF good exchange rate is the crisis in Ukraine that boosted demand for safe haven currencies.

Companies do not appear to be affected by the strong Swiss franc

                Despite very weak euro and strong franc, business in Switzerland don’t seem to be concerned. Companies generally have hedged their assets against exchange rate fluctuations, learning from hard lesson of scrapped cap on CHF in 2015. “High prices are an indicator of a successful economy,” claims Rudolf Minsch, the chief economist at business lobby economiesuisse. “This is the price you have to pay. “It is a different situation than we had in 2015,” said Ivo Zimmermann, a spokesman for the Swiss industry group Swissmem. “The purchasing power of the Swiss franc has declined significantly since then.”