Forecast For EUR/CHF and USD/CHF Exchange Rates

What is Next for EUR/CHF?

                The Swiss franc strengthened moderately versus the Euro in October as the EUR/CHF exchange rate went down from 1.0770 to 1.0674. Global issues like the pandemic made investors not eager to risk, which triggered higher prices of safe-haven currencies. The Swiss National Bank has eased recently the interventions on forex market, which means less upward pressure is put on CHF. But still analysts expect the exchange rate of CHF to keep on being strong well into 2021. As of now, on year-to-year basis, CHF is the second-best performing currency of all G10 ones, despite continuous interventions campaign of the SNB to stop CHF from getting overvalued.

Forecast for USD/CHF

                The pair of USD and CHF is one of the strongest in the world with highly regarded safe haven Swiss currency and the most liquid currency of the world, USD. According to analysts, the Swiss franc should depreciate a lot at the end of the year with the Swiss government forced to introduce further stimulus to country’s economy as the pandemic causes more restrictions and triggers stronger currency. Long-term forecast for USD/CHF exchange rate is set at buy and should intensify the closer it gets to level of 0.900 Swiss francs, as 0.940 Swiss francs is expected within next year. Lately the exchange rate was at around 0.9109 level.

The SNB’s Role in CHF Exchange Rate

                The CHF exchange rate both in pair with EUR and USD or other currencies, is highly influenced by the SNB’s policy, which aims at depreciating Swiss franc to meet inflation goal and stop the damage to export. The SNB is making a lot if interventions on the forex market, as just in the first half of this year it bought foreign exchange worth of 90 billon francs. Also, it pledges to keep record low interest rates of minus 0.75%, which are at this level since 2015. On the monetary policy assessment on December 17, it is expected that the Swiss central bank will keep rates and signal to continue its monetary expansion. According to President of the SNB Thomas Jordan the policy is essential to limit damage done by the pandemic as much as possible.

Other Factors Important for USD, EUR vs CHF

                In the near perspective there are some events that may increase the volatility of Swiss franc, both versus USD or EUR. First of all, in the exchange rate with USD, important will the semiannual currency report on USD, that was previously delayed, but is expected to be published by the end of the year. In this report Switzerland might get listed as a currency manipulator, as it is already on the watchlist. Such action might add to speculation that the SNB will step back from interventions to be removed from the list. However, this might in turn strengthen CHF exchange rate, so the SNB might as well stick to its interventions even when it means being on the US currency manipulators’ list. Other factor influencing the USD/CHF exchange rate is obviously the result of US elections. If Biden wins, then global trade tensions will ease, and thus CHF might get weaker. Also, what could discourage investors to buy Swiss francs is the progress on COVID-19 vaccine and the approval of EU Recovery Fund in the beginning of 2021. The situation of Brexit is also important – if there is avoided a no-deal scenario, CHF should stop getting so overvalued. Still, even if all of these events happen, CHF exchange rate will remain solid.