Switzerland: Swiss Franc Appreciation and the Swiss National Bank’s (SNB) Policy Stance

■ The Swiss franc rose to its highest level against the euro since January 2015, with the SNB showing a positive attitude towards foreign exchange intervention.  

■ Based on expectations of rising inflation, the SNB is negative about reintroducing negative interest rates, and the appreciation of the Swiss franc against European currencies may continue this year.  

   The Swiss franc (CHF) has remained strong. As of March 11, its year-to-date change is: 1.5% against the US dollar and 3.1% against the Japanese yen. Although it has lagged behind resource-exporting currencies such as the Brazilian real and the Australian dollar, which maintain high interest rates, the Swiss franc has remained stable even in an environment with the lowest policy interest rate (0%) among major countries. In August last year, the tariff rate on goods exported to the US was raised to 39% (and then lowered to 15% in mid-November last year), but the trade surplus in 2025 is estimated at approximately 54.3 billion Swiss francs, only about 10% less than the previous year. Since April last year, financial market uncertainty has increased, but supported by the continued accumulation of the trade surplus and a sound fiscal position, the Swiss franc's status as a safe-haven currency remains solid. 

 
In the near term, since the US and Israel launched airstrikes against Iran on February 28, the Swiss franc's appreciation against the US dollar has slowed, but it has risen to its highest level against the euro since January 2015. On March 2, the Swiss National Bank (SNB) stated that it "strengthened its intention to intervene in the foreign exchange market." As of this writing, the market generally believes that no intervention has been implemented, but such a public statement is rare; the last similar instance was during the 2016 referendum on the UK's exit from the European Union (EU). Given Switzerland's population of less than 10 million and its limited domestic market, it is highly dependent on exports for foreign exchange earnings. The SNB is increasing its vigilance against excessive appreciation of the Swiss franc. 

 
However, the SNB remains cautious about reintroducing negative interest rates when using interest rate measures to curb the Swiss franc's appreciation. It is expected that the zero-interest rate policy will be maintained at the first monetary policy meeting of 2026, with results to be announced on March 19. In December, the SNB projected a gradual recovery in inflation. The February Consumer Price Index (CPI), released on March 4th, showed a 0.6% month-on-month increase, indicating a faster pace of growth; the year-on-year increase was 0.1%, remaining within the SNB's target range (0-2%). Therefore, the SNB is expected to reiterate its caution regarding excessive Swiss franc appreciation, but will maintain its assessment that "the current financial environment is appropriate." 

 
In this context, short-term financial markets have seen a resurgence in expectations for a Swiss interest rate hike this year, driven by changes in policy expectations in the Eurozone and the UK. However, approximately 90% of Switzerland's electricity is generated by hydropower and nuclear power, and about 70% of its crude oil imports come from outside the Middle East. Therefore, even if the Middle East conflict persists, the impact of rising energy prices on Switzerland may be relatively limited compared to other European countries. If investor risk sentiment deteriorates, the Swiss franc is expected to remain strong against other European currencies.