The Swiss Franc has wiped out all losses since the beginning of the year primarily due to a wave of risk aversion based on worries of a potential US recession, global economic slowdown, and persisting geopolitical tensions. The Swiss Franc appears to earn many long-term investors’ choice of safe haven.
Swissmen Promt for Immediate Action

Despite two interest rate cuts so far in March and June 2024 and investors’ anticipation of an additional cut next month, the Swiss Franc has shown gains of more than 5% against the US Dollar, 4% against the Euro, and 5% against the Pound Sterling.
According to a recent article in Bloomberg, Swissmem, the largest manufacturers’ lobby group in Switzerland, is urging the Swiss National Bank (SNB) to take immediate action to address the rapid rise of the Swiss Franc, which is endangering the country’s industrial recovery and protect exporters. Swissmem calls on the SNB to use its mandate to prevent further currency gains as the appreciating Franc threatens recent improvements in export sales. While the SNB has previously intervened in currency markets, it has focused on cutting interest rates this year.
Long-term Investors Safe Haven
The Swiss Franc is known for its stability and reliability, making it a popular safe haven during times of financial uncertainty. It is frequently used as a global reserve currency and ranks as the sixth most traded currency worldwide. Analysts suggest that the Swiss Franc’s upward direction is not over yet and is expected to continue.
Although policy easing usually has a negative impact on a currency, global political uncertainties have strengthened the Franc’s reputation as a safe investment. The markets expect a 25 basis point reduction from the SNB on September 26, with a 60% likelihood of another decrease in December, potentially bringing the official rate down to 0.75%.
Unwinding of Carry Trades Strengthens the Swiss Franc
The Swiss Franc strengthened due to the reversal of carry trades. When these trades are undone, investors buy back the borrowed currency, leading to increased demand for it. In a carry trade, investors borrow a low-yielding currency like the Swiss Franc and exchange it for higher-yielding currencies to capitalize on the interest rate difference. If financial conditions change or market sentiment becomes more risk-averse, investors reverse these trades by purchasing Swiss Francs again, causing its value to rise.
Conclusion
The Swiss Franc has regained all its losses since the start of the year, driven by global economic uncertainties and geopolitical tensions, positioning it as a preferred safe haven for long-term investors. Despite multiple interest rate cuts, the Franc has appreciated significantly against major currencies. The strong Franc has prompted calls from Swissmem for the Swiss National Bank to take action to protect the industrial sector. The currency’s reputation for stability, coupled with the unwinding of carry trades, has further boosted its value. Analysts predict continued strength for the Swiss Franc amid ongoing global political and economic challenges.