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CHF Exchange Rate Is a Boost for Business

CHF Exchange Rate Is a Boost for Business

07 October 2022

Recent record-breaking Swiss franc’s exchange rate versus the euro is giving Swiss economy a boost as it battles with inflation

 

Record-Breaking CHF exchange rate

In recent months CHF exchange rate has been on the surge versus the euro. Considered a safe have currency, CHF hit a high of 0.94 francs versus the euro in the beginning of the week after the shocking Italian election. Even though it has lost its value a bit since then, its level is still one of the highest since the launch of euro. Economists claim the reason for that is more weaker euro than strong exchange rate of Swiss franc. Growth in the eurozone has run out of steam, and even signs of recession can be noticed. Nevertheless, such situation is giving a boost to the Swiss economy as it is battling with high, as for Switzerland, inflation.

 

Preventing Inflation

The Swiss National Bank has abandoned recently its monetary policy aimed at stopping CHF from getting too strong, as higher price of franc is helping in easing inflation pressure. SNB finally raised interest rates, that for long time had remained in record low negative territory. Experts claim most of inflation is a result of imports, thus strong Swiss franc is reducing price of imported goods a bit. That may be a reason why there is no panic observed on markets like it was back in 2015 when CHF exchange rate was very high, and exporters feared prices for export and production costs would hit very high levels. Nowadays, much higher inflation in eurozone than in Switzerland makes CHF appreciation much less problematic for inventors than before.

 

EUR CHF Rate As Boost for Economy and Tourism

Swiss companies are accepting now strong CHF as they would rather live with high exchange rate than worry about cost pressures from importers or rises of wages by French, German companies. So, if strong CHF is easing pressure on imports, Swiss companies that have order books full won’t complain now. In tourism sector, which is very sensitive to fluctuation of exchange rate, rise of Swiss franc’s price enabled companies to increase prices in lesser degree than those in neighboring countries, where inflation is higher. Swiss hoteliers are thus more competitive than their foreign peers. However, experts warn that this boost for economy, tourism might be temporary, and it remains to be seen how situation develops in winter. All depends on CHF exchange rate, growth or recession in eurozone.

ExchangeMarket.ch
ExchangeMarket.ch