Swiss Franc Rises to Over 2-Week High

The Swiss franc strengthened to around 0.789 per USD, the highest in over two weeks, as hopes of easing Middle East tensions following a US-Iran two-week ceasefire reduced demand for the greenback as a safe haven. Tehran also agreed to allow the safe transit of vessels through the Strait of Hormuz during this period, which alleviated concerns about energy-driven inflation. Swiss inflation surged in March to its fastest pace in a year, driven by rising heating oil costs amid the Middle East energy supply crunch. Data suggested that the dampening effect of a strong Swiss franc on import costs and inflation is being counterbalanced by higher energy prices, easing pressure on the Swiss National Bank to adjust policy.

The Swiss franc traded near 0.80 per USD, staying close to the lowest since mid-January, as investors sought the safety of US dollar amid persistent geopolitical risks after President Trump vowed more aggressive strikes on Iran. At the same time, rising domestic inflation reduced pressure on the Swiss National Bank to cut interest rates. Swiss inflation accelerated to a one-year high of 0.3% in March, from 0.1% in February, though below expectations of 0.5%, driven by higher energy prices amid the ongoing Middle East conflict. Figures suggest that the dampening effect of a strong Swiss franc on import costs and inflation is being counterbalanced by higher energy prices, providing the SNB with some flexibility. Swiss National Bank Chair Martin Schlegel and SNB member Petra Tschudin have reiterated the central bank's increased willingness to use interventions to curb the franc's strength, as reintroducing negative rates remains a high bar.

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.