The Swiss franc is currently trading at approximately 0.81 per USD, remaining close to its highest levels observed since 2011. This rise is largely attributed to a widespread shift towards safe-haven assets amid increasing tensions in the Middle East. The recent surge in geopolitical risks follows Israel's intensified strikes against Iran, which have targeted nuclear sites and military facilities, resulting in the deaths of two senior Iranian commanders. The situation has been exacerbated by Israel's warnings of potential further action and Iran's pledges of retaliation.
Beyond these geopolitical concerns, several other elements have bolstered the franc's value, which has appreciated by about 10% this year. Key among these are the uncertainties surrounding President Trump's trade policies and the generalized weakening of the US dollar. This depreciation of the dollar has been fueled by cooler inflation data and escalating worries about the US economic and fiscal situation.
On the home front, the Swiss National Bank (SNB) may reintroduce negative interest rates. Market analysts widely expect the SNB to reduce its key interest rate in its upcoming meeting, with some predicting a return to negative rate territory.
