The Swiss franc continued its strong downward trend, its attraction of refuge with investors having increased. The USD/CHF exchange rate has dropped in the last three consecutive days and is now at its lowest level since September 2011. Here are some reasons why the Swiss franc is considered a better alternative to the US dollar.
Switzerland is a neutral country on most global issues.
Copy link to sectionThe main reason why investors consider the Swiss franc as a refuge value is that Switzerland is a neutral country on many subjects. It is one of the main European countries that is not a member of NATO.
Therefore, this means that it is not required to increase its defense expenses like other NATO members. In addition, its neutrality means that it is never threatened with an attack on the part of European countries, the Middle East and Asia.
The only time recent when the country took sides and implemented sanctions was during the Russian-Ukrainian crisis. At the time, Switzerland took the side of Russia and imposed sanctions against several officials.
The Swiss position is very different from that of the United States, which is involved in world conflicts. The United States is engaged in crises in America, Asia and Europe, a situation that has contributed to their considerable debt. For example, the country has spent more than $ 7,000 billion in the war in Afghanistan.
Switzerland has a strong economy.
The USD/CHF exchange rate has also dropped due to the vigor of the economy. Recent data show that Switzerland has a GDP of more than $ 884 billion and total public debt of only $ 140 billion.
On the other hand, the United States has a public debt of more than $ 36.5 billion for GDP of more than 27.7 billions of dollars. Worse, the public debt should continue to grow in the coming years, Donald Trump’s budget providing for 4.5 billions of additional dollars.
In addition to all this, the Swiss National Bank has more than $ 800 billion in assets, which means that its net debt is insignificant. For example, the bank is the tenth largest holder of American treasury bills.
Read more: USD/CHF analysis: this is why the Swiss franc fly away
The Swiss economy is doing well.
Copy link to sectionThe USD/CHF pair has also dropped due to the persistent vigor of the Swiss economy. The data show that the economy increased by 0.8 % in 2024, a growth below that of the previous year (1.2 %).
Analysts predict economic growth of 1.4 % this year and 1.6 % next year. Although it is always solid economic growth, it is lower than previous estimates. The main reason for this slowdown is the recent taxation of customs duties by Donald Trump and the vigor of the Swiss franc.
A strong Swiss franc penalizes the economy by making its exports more expensive than those of other countries.
What are the prospects for the USD/CHF exchange rate?
Copy link to section The weekly graph shows that the USD/CHF exchange rate has dropped in recent months. This drop occurred after the formation of a triple summit figure at 0.9215. The neck line of this figure is 0.8336.
The pair passed under mobile averages at 50 and 100 weeks, a sign that the lowering of the hand. It also crossed the neck line at 0.8335, its lower level of 2024.
The distance between the triple top and the neck line is around 9.5 %. Therefore, by measuring this same distance from the neck line, the objective for the USD/CHF is 0.7534. A movement above the neck line at 0.8337 would invalidate the lower perspective.
This article was translated from English using artificial intelligence tools, then reread and corrected by a local translator.
