Swiss Franc Holds Steady

The Swiss franc hovered near $0.808 after fresh attacks lifted oil prices and supported demand for safe-haven assets. Oil prices surged after the US and Iran exchanged airstrikes following Iran’s attacks on vessels near the Strait of Hormuz, strengthening the greenback and raising concerns over new supply chain disruptions. US President Donald Trump stated that the ceasefire was over, as far as he is concerned, while also revoking the 60-day waiver that allowed Iran to sell crude, dampening hopes for a lasting agreement. On the other hand, rising inflation concerns supported demand for safe-haven assets and strengthened the Swiss franc. The Swiss National Bank left its policy rate unchanged at 0% at the latest meeting, while reiterating the preference to intervene on foreign exchange markets “if necessary” to curb excessive appreciation and imported inflation.

The Swiss franc traded around $0.806, gaining about 0.5% from its recent low of $0.8099 reached on July 1 while remaining 4.6% weaker than before the Middle East conflict. The Swiss National Bank left its policy rate unchanged at 0%, maintaining its reliance on currency interventions to prevent excessive franc appreciation. Swiss inflation slowed to 0.5% in June, marking its first decline in eight months and remaining within the SNB's 0–2% target range as easing geopolitical tensions and lower oil prices reduced price pressures. At the same time, unemployment fell to a seven-month low of 2.9%. The International Monetary Fund urged the SNB to remain ready to either tighten policy or cut rates to negative territory if stagflation risks emerge, while the central bank reiterated its commitment to currency market interventions. Policymakers expect inflation to edge higher later this year while remaining stable over the medium term, while the government cut its 2026 growth forecast to 0.9%.

The Swiss franc strengthened to around $0.807 against a weaker dollar, rebounding from a one-year low of $0.81227 hit on June 24, as sliding oil prices tempered Federal Reserve rate hike bets. Despite gaining ground, the franc remains 4.8% weaker than before the Middle East conflict, and a potential peace deal could further reduce haven demand. The Swiss National Bank kept its policy rate unchanged at 0% for a fourth consecutive meeting, maintaining that the current stance remains consistent with price stability and economic growth. However, the SNB revised its inflation outlook higher and reiterated its willingness to intervene in foreign exchange markets if needed. Meanwhile, the International Monetary Fund reported that Swiss economic growth will slow to 1.1% in 2026 amid weak external demand and tariff uncertainties. The Swiss government also trimmed its own 2026 domestic growth forecast to 0.9%, citing the dampening effects of recent energy price spikes.