The Swiss Franc has established itself as a noteworthy contender among major global currencies during the first half of 2025. While many currencies fluctuate under various economic pressures, the Franc has exhibited resilience, outperforming the US Dollar and maintaining a steady range against the Euro. Follow the Swiss National Bank (SNB) as it skillfully plows through these dynamics. Its policies and actions will steal the spotlight, particularly in light of possible upcoming trade developments with the United States.
In both 2022 and 2023, the SNB strongly stepped into currency markets by purchasing Francs to counter domestic inflation. According to new data, we’re seeing a major change in strategy. In Q1 2025, the SNB made only 49 million Francs in foreign exchange acquisitions. This represents a significant reversal from its recent, hawkish buying spree. This major change raises a number of important questions. Will America’s central bank continue down the path of aggressive interventionism, or will it embrace a future that is more passive?
The Swiss Franc’s Performance Against Major Currencies
During the first half of 2025, the Swiss Franc was one of the major currencies’ “silent winners.” Overall, it proved its mettle, especially standing tall against the US Dollar. This performance is especially important given that the Dollar has been under pressure from mixed economic signals and global geopolitical strife.
Against the Euro, the Franc has settled into a wide sideways trading range, and while still very strong, moved away from its all-time highs. The Euro/Swiss Franc currency cross has traded between 0.9305 and 0.9425 since April 22. Even with these upward movements, the pair is still in a long-term downtrend, mirroring the long-term economic and monetary policy fundamentals in the Eurozone. This pair dropped to an all-time low on November 22, 2024, settling at 0.9204. This fall serves to reaffirm the constant downwards pressure that the Euro continues to be under against the Franc.
The SNB’s past attempts to keep inflation at bay with currency interventions were a big reason for this strong showing. Because the past few months’ acquisition numbers have indicated a more wait-and-see attitude, analysts are curious. They need to understand how future economic conditions are expected to affect the Franc’s trajectory.
Implications of US Tariffs on the Swiss Economy
The policy strategy of the SNB is likely to soon come under added stress with possible US tariffs on European automobiles just around the corner. The Swiss government is evidently, and at this point improbably, still looking for a middleground with US officials ahead of the July 9 deadline. If successful negotiations do not happen, tariffs would be stuck at 10%, which would be a dangerous change for Switzerland’s economic environment.
If a 31% duty is enacted, the Swiss economy will be put at grave risk. This extreme step could force the Swiss National Bank to lower interest rates even further into negative territory. This step is intended to boost this already burgeoning economic activity. It might reduce the Franc’s attractiveness for investors seeking safe-haven currencies.
This interplay between tariffs and currency value highlights the fragility of international trade relations and their immediate effects on domestic monetary policy. How the SNB responds to these developments will be key in determining whether the medium-term economic stability in Switzerland can be achieved.
Future Prospects and External Influences
Going forward, many more things will affect performance of the CHF other than tariff increases. In the background, ongoing trade agreements and deteriorating US-China relations are changing investor sentiment. Middle East conflicts have a large impact on market behavior.
The SNB’s historical strategy before 2022 aimed at suppressing the Franc’s value to revive inflation may become relevant again if external pressures mount. Should trade tensions escalate or if economic indicators signal distress, the central bank may need to reconsider its current approach to currency management.
As global economic conditions evolve, traders and economists alike will watch closely how these external influences shape not only Switzerland’s monetary policy but the broader currency market dynamics.