Swiss Franc Holds Firm

The Swiss franc eased toward 0.8 per USD, the lowest since mid-January, as investors favored the US dollar as a safe-haven in the face of persistent geopolitical uncertainty. Growing skepticism about a near-term ceasefire in the Iran conflict dampened market sentiment, as President Trump declined to commit to a deal amid limited signs of compromise from Tehran. Disruptions linked to the conflict have pushed energy prices higher, reinforcing inflation concerns and growth prospects. In the meantime, Swiss National Bank Chair Martin Schlegel and SNB member Petra Tschudin also reiterated the central bank's increased willingness to use interventions to curb the franc's strength. The central bank left its benchmark at 0% for the third consecutive meeting on March 19, as widely anticipated, and it is expected to keep rates unchanged this year.

The Swiss franc traded around 0.79 per USD, nearing the highest since 2011, supported by safe-haven demand amid geopolitical tensions and a steady policy stance. The Swiss National Bank left its benchmark at 0% for the third consecutive meeting, as widely anticipated, with policymakers signaling their increasingly readiness to intervene in foreign exchange market to prevent excessive currency appreciation and safeguard price stability. Annual inflation held at 0.1% for the third month in February, at the bottom of the SNB's 0%-2% target, but it remains in line with the central bank's forecasts. The SNB predicted that the current increase in energy prices will push inflation up more rapidly in the coming quarters, averaging 0.5% in 2026 and 2027, and 0.6% in 2028. After a mild recovery in Q4, the economy is forecast to grow around 1% in 2026, but the central bank highlighted a significantly more uncertain outlook.

The Swiss franc traded around 0.78 per USD, remaining close to record highs, supported by continued safe-haven demand amid persistent geopolitical risks. The continued escalation of the Middle East conflict poses a major threat to the global economy, as it intensifies inflationary pressures and raises the prospect of higher interest rates. The franc has remained strong even after the Swiss National Bank signaled it is increasingly ready to intervene in FX markets. A key concern for the central bank is the sustained appreciation of the currency amid the current risk environment, which could generate deflationary pressures. Swiss inflation remains extremely low, at 0.1%, staying at the lower bound of the SNB’s 0–2% target range.