Swiss Franc Surges to Decade High on Stickier Inflation Outlook

(Bloomberg) — The Swiss franc climbed to a 10-year high against the euro as expectations of stickier inflation and the prospect of lower US tariffs bolstered demand for the haven currency.

The franc rose 0.4% to 0.91862 per euro, its strongest level since January 2015 when the Swiss National Bank ended the 1.20 exchange rate cap. It’s on track for a seventh daily gain, the longest winning streak since August 2024.

The currency’s advance follows comments from SNB Vice President Antoine Martin who said this week that inflation “is expected to rise slightly in the coming quarters,” dampening speculation of a return to negative rates. Money markets now assign less than a 30% probability of the sub-zero policy over the next year, down from about 64% a month ago.

Separately, reports that Switzerland is close to securing a reduced 15% tariff on exports to the US gave the Swiss currency an additional boost. The franc also benefited from the flight to safety on Friday as global equities retreated.

Hedge funds are positioning for further franc strength, particularly against the euro and the yen, even as officials may grow uncomfortable with the pace of appreciation, according to European traders familiar with the transactions, who asked not to be identified because they aren’t authorized to speak publicly.

Long positions against the greenback are also on the table as December is historically the strongest month for the Swiss franc.

What Bloomberg Strategists Say…

“If markets continue to test the upper bound of tolerance, the central bank will likely need to step up interventions, or consider cutting rates back into negative territory, effectively charging investors for holding the haven asset. Either way CHF doesn’t look like an attractive buy at this level.”

—Skylar Montgomery Koning, macro strategist. For the full analysis, click here.

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