Franc to Stay Supported says J. Safra Sarasin
- Written by: Sam Coventry
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Swiss private bank says the franc to hold firm, supported by Switzerland’s strong external balances, safe-haven appeal, and positive real yields.
However, new forecasts show the currency is not necessarily set to strengthen significantly further: The tone of their outlook is one of stability and resilience rather than volatility or major directional shifts.
The bank highlights that although the SNB has shifted to a more neutral policy bias, the franc still benefits from its reputation as a low-volatility, defensive currency.
On the monetary side, Sarasin notes that real rates in Switzerland remain comparatively attractive, especially given subdued inflation.
That means Swiss assets continue to offer positive inflation-adjusted returns, which helps support the franc even without outright policy tightening.
Furthermore, the SNB has signalled that it will tolerate - and, if needed, even lean toward - a stronger franc as a tool to contain imported inflation.
This implicit policy backstop discourages heavy speculative selling and underpins the currency's stability.
In short, J. Safra Sarasin sees the franc staying firm because:
1. Safe-haven flows persist amid global geopolitical and economic risks.
2. Positive real yield support makes CHF assets appealing.
3. SNB tolerance for a strong franc provides a policy floor.
4. Switzerland’s external surplus and solid fundamentals add to structural support.
The upshot: even if the franc doesn’t strengthen dramatically from here, it remains unlikely to weaken meaningfully.
Investors should expect the CHF to hold its ground — a "well-supported" currency, particularly in a world increasingly worried about currency debasement.
Here are the key forecasts from the bank's research:
EUR/CHF: expected to rise slightly to 0.97 in 3 months and to 0.98 in 12 months, indicating a mild recovery in the euro as rate differentials stabilise but the franc remains strong.
USD/CHF: seen at 0.86 in 3 months and 0.88 in 12 months, implying a modest franc depreciation as U.S. rate cuts narrow the gap and risk appetite improves.
GBP/CHF: forecast at 1.12 in 3 months and 1.11 in 12 months, showing the pound roughly flat against the franc.