The hedging value of the Swiss Franc: Why does the Swiss Franc become a safe haven for funds during global turmoil?

Switzerland, known for its political stability, economic independence, and military neutrality, has issued the Swiss Franc (CHF), which has long been regarded as a safe-haven asset in the international financial markets. During previous global financial crises—whether the 2007 financial tsunami or the 2011 European debt crisis—the Swiss Franc demonstrated its unique risk resistance capabilities. So, in the current environment of unpredictable global trade dynamics, does the Swiss Franc still hold appeal as a long-term investment target?

Market Logic Behind the Swiss Franc Appreciation

Since 2025, global geopolitical risks have intensified, and trade frictions among countries have become frequent, prompting international capital to flow more rapidly into safe assets. Against this backdrop, the Swiss Franc has embarked on an independent appreciation trend. The USD/CHF exchange rate has plummeted from 0.9078 at the start of the year to around 0.8, with the Swiss Franc appreciating over 10% against the US dollar. This wave of appreciation mainly occurred after April. The market generally expects the upward momentum of the Swiss Franc to persist, and industry forecast data suggest that USD/CHF could further decline to the 0.74-0.85 range.

It is noteworthy that the Swiss Franc’s appreciation is not solely driven by Switzerland’s domestic economic growth but also by international investors’ reassessment of global risks. In an environment of rising uncertainty, capital tends to favor low-risk assets denominated in Swiss Francs to hedge potential systemic risks.

The Role of the Swiss National Bank and Policy Shifts

The Swiss National Bank’s (SNB) policy decisions directly influence the short- to medium-term trend of the Swiss Franc. Over the past two years, the SNB has shifted from rate hikes to rate cuts. In June 2025, the Swiss National Bank lowered its policy rate to 0%, marking the first time since late 2022 that it has returned to zero after ending negative interest rates. The purpose of the rate cut is not only to address inflation but also to mitigate the impact of excessive Swiss Franc appreciation on export industries.

Historically, the SNB once unexpectedly announced the abandonment of the EUR/CHF 1.20 exchange rate floor in 2015 in response to a weakening euro, causing market turbulence. This event reinforced market awareness of the SNB’s foreign exchange intervention capabilities. Currently, as global risk sentiment fluctuates, investors should closely monitor potential policy signals and market intervention cues from the SNB.

The Relationship Between the Swiss Franc and Other Safe-Haven Assets

The Swiss Franc is often discussed alongside traditional safe-haven assets such as gold and the Taiwan dollar. Switzerland’s gold reserves amount to 1,040 tons, ranking among the highest per capita globally. However, there is an inherent difference between the Swiss Franc as a pure currency asset and gold as a precious metal. Historically, their correlation in normal market conditions has been limited, but during extreme risk environments—such as after the 2008 crisis or during the 2011 European debt crisis—both the Swiss Franc and gold have shown synchronized upward movements.

Compared to Asian currencies like the Taiwan dollar, the Swiss Franc’s advantage lies in its deep integration with the global financial system and Switzerland’s long-term stable political and economic environment. The Taiwan dollar, on the other hand, is more influenced by regional geopolitical factors and has weaker safe-haven attributes. Therefore, during systemic global risks, the Swiss Franc often becomes the preferred safe-haven instrument for large international capital flows.

How Global Economic Conditions Drive the Swiss Franc

The long-term valuation of the Swiss Franc fundamentally depends on the level of global economic risks. Several current factors are boosting the attractiveness of the Swiss Franc:

Trade Policy Uncertainty: Rising tariffs and escalating trade wars have lowered global economic growth expectations, prompting investors to shift toward low-risk assets.

Economic Growth Slowdown: The International Monetary Fund (IMF) forecasts global GDP growth of 2.8% in 2025, below historical averages, increasing recession risks.

European Situation: As the currency of a non-EU European country, the Swiss Franc’s movements are closely linked to European political and economic developments. If Europe faces significant turmoil, the Swiss Franc’s appreciation potential against the euro will increase markedly.

Future Trends of USD/CHF and EUR/CHF

Regarding USD/CHF, the tariffs introduced by Trump disrupted the long-term stability of this exchange rate. After appreciating over 10% this year, the market generally remains bearish on USD/CHF, with expectations of further declines.

For EUR/CHF, in the first quarter of 2025, inflation expectations in the Eurozone supported the euro, pushing it up to 0.9676; however, in the second quarter, European economic weakness and rising geopolitical risks caused the pair to fall back and oscillate around 0.94. If Swiss safe-haven demand continues to grow or if the SNB intensifies intervention, EUR/CHF could further decline below 0.90.

How Ordinary Investors Can Participate in Swiss Franc Investment

There are various ways to invest in the Swiss Franc, suitable for different types of investors:

Bank Forex Trading is the most traditional method but faces disadvantages such as wide spreads and high transaction costs, making it less suitable for active traders.

Futures Trading offers leverage and two-way trading, suitable for professional investors employing complex strategies. However, futures involve rollover costs and expiration dates, requiring periodic adjustments for long-term positions.

CFD Trading has become the mainstream choice for retail investors in recent years. Compared to futures, CFDs feature lower margin requirements, the ability to hold positions indefinitely (no rollover needed), and a wide range of trading instruments. Investors can directly trade major currency pairs like USD/CHF and EUR/CHF on standard CFD platforms.

Timing and Strategy Recommendations for Investing in Swiss Franc

Short-term fluctuations of the Swiss Franc are mainly driven by central bank policy differences and Swiss economic data, while long-term core logic depends on the potential for global crises. Essentially, holding Swiss Franc assets is a risk hedging approach, helping investors protect assets during market turbulence.

If investors are pessimistic about the global economic outlook over the next few years, the Swiss Franc should be a core component of their portfolio. Conversely, if confidence in global economic recovery is high, the allocation to the Swiss Franc should be reduced accordingly.

In actual trading, it is recommended to operate during the most liquid market hours—from 9 PM to 2 AM Beijing time (with a 1-hour delay during winter time)—when the European and US markets overlap. During this period, liquidity is highest, spreads are narrowest, and participation is most advantageous.

Summary

As a traditional safe-haven currency, the Swiss Franc demonstrates strong upward momentum amid rising global economic uncertainties. For investors seeking to hedge systemic risks, the Swiss Franc is a serious consideration. Compared to currencies like the Taiwan dollar, the Swiss Franc enjoys higher international recognition, greater liquidity, and more stable safe-haven properties.

Large institutional investors tend to participate via futures markets, while individual traders are better suited to engaging through CFD platforms. As the Federal Reserve’s policies pause and global central banks gradually enter a rate-cutting cycle, the Swiss Franc is expected to become an important tool for hedging systemic risks in the coming years.