Swiss Franc Fundamentals (CHF)

Swiss franc fundamentals are a tug of war. On one side are investors who buy the franc whenever they are scared. On the other is a central bank that does not want the franc to get too strong, and has shown more than once that it will act to stop it.

Why money runs to the franc

The franc is a small currency, on one side of 6.4 percent of currency trades in April 2025 (BIS Triennial Survey). Yet in a sell-off it attracts money out of all proportion to that size, much like the yen and often the dollar. Investors treat it as a place to park money until things calm down, and it can rise whatever the interest rate on offer. The idea is explained in What Is a Safe Haven Currency?

A recent case: the franc appreciated against the dollar in the first half of 2025, in particular in early April, after the US announced extensive import tariffs (SNB annual report 2025). That shock came from the US, and the dollar lost value broadly, not just against the franc.

Why the SNB pushes back

Switzerland lives on exports, and a strong franc makes Swiss goods dearer abroad. The SNB says it plainly: an appreciation of the franc curbs inflation and economic activity (SNB strategy).

The Swiss National Bank defines price stability as “a rise in the Swiss consumer price index (CPI) of less than 2% per annum”, and counts lasting deflation as a breach too (SNB strategy). So its target is a range below 2 percent, and falling prices count as failure. A franc that keeps rising drags inflation towards zero, so the SNB has a direct reason to resist it.

It assesses policy four times a year, in March, June, September and December, and can act in between if it has to. The record of those assessments is on SNB Interest Rate Decision, the next one on When is the next SNB rate decision?

Two levers: the rate and the currency itself

The first lever is the policy rate. The SNB left it at 0% at each of its assessments of March, June and September 2026 (SNB Quarterly Bulletin 3/2026). With the rate that low, there is not much room left to cut.

That is when the second lever comes in: selling francs and buying foreign currency. The SNB says it needs to buy foreign currency “in particular when the scope for interest rate cuts is small and the appreciation of the Swiss franc threatens to result in a deflationary development”. It bought the equivalent of CHF 5.2 billion in 2025, after CHF 1.2 billion in 2024 (SNB annual report 2025).

In March 2026, citing the conflict in the Middle East, it said its willingness to intervene had increased, and it repeated that in June. Looking back in September, it wrote that it had thereby “countered a rapid and excessive appreciation of the Swiss franc”. At the September assessment the word “increased” was gone: the SNB was again simply willing to be active in the currency market as necessary (SNB Quarterly Bulletin 3/2026). Watch that wording from one assessment to the next. Note too that the SNB named the speed of the rise, not only its size.

The rate gaps still count. Compare Interest rate differential by currency pair with Real interest rates by currency, which takes inflation off each side, and see the dollar pair on USD/CHF fundamentals. With its rate long near the bottom of the majors, the franc has also served as a funding currency.

EUR/CHF and the 1.20 floor

Most traders read the franc’s strength off EUR/CHF, and for a reason. On the customs office’s figures for 2025, which leave out precious metals, euro area countries took about 47 percent of Swiss exports between them. The largest single buyer is the United States, at about 19 percent, ahead of Germany at about 15 percent (Federal Office for Customs and Border Security). The euro side is in Euro Fundamentals (EUR).

One correction newcomers need: the SNB itself says it does “not focus on individual currency pairs” but on the franc’s overall situation (SNB annual report 2025). A stable EUR/CHF does not mean the SNB is relaxed if the franc is surging against the dollar.

It did once tie itself to one pair, and that is the sharpest chapter in its modern history. In August 2011 the ECB’s reference rate for EUR/CHF fell as low as 1.0451 (ECB). On 6 September the SNB called the franc’s “massive overvaluation” an acute threat, set a minimum of CHF 1.20 per euro and said it was “prepared to buy foreign currency in unlimited quantities” (SNB press release). The reference rate went from 1.1111 the day before to 1.2036.

On 15 January 2015 it dropped the floor and cut its rate to −0.75%, saying that holding it was “no longer justified” (SNB press release). EUR/CHF went from 1.201 on 14 January to 1.028 on the 15th (ECB reference rates). A level defended for more than three years was gone in a day, and anyone who had treated 1.20 as a floor that could not break was on the wrong side of a 14 percent move.

The chart gave little warning, because the floor had made the pair quiet. Measure the average size of EUR/CHF’s move from one ECB reference rate to the next, up or down (ECB). Under the floor, from 7 September 2011 to 14 January 2015, it was 0.13 percent a day. That is calmer than from 1999 to 2007, at 0.16 percent, and a third of the 0.40 percent from 2008 until the floor. Since 2016 it has been 0.22 percent. The move of 15 January was more than a hundred times a typical day under the floor. A quiet chart showed you how hard the SNB was holding the line, not how far the pair could go if it let go.

The Swiss releases

• Switzerland Inflation Rate (CPI): the key release. With a target range below 2 percent, a drift towards zero raises the odds of more intervention or a lower rate.
• Switzerland GDP Growth Rate: the health of the export economy. Read it with care: the SNB said second-quarter growth in 2026 was exceptionally strong, but that an unusually robust performance in chemicals and pharmaceuticals meant GDP overstated the underlying momentum (SNB Quarterly Bulletin 3/2026).

Still, for the franc the bigger question is usually the mood of the market and what the SNB will put up with, more than any Swiss release.

Positioning against the SNB

Week by week, the CFTC’s count of funds in franc futures (CFTC) is on the Swiss franc COT report. A crowded long-franc position carries a risk most crowded trades do not: a central bank on the other side that has said it is willing to sell francs.