Safe-haven assets have had a robust beginning in 2026, with both gold and silver reaching new heights, while the Swiss franc is trading at a decade high due to widespread global uncertainty.
Swiss officials are observing these developments with some concern.
This year, the Swiss franc has already appreciated by 3.5% against the dollar, largely driven by erratic U.S. trade policies, doubts about Federal Reserve independence, and potential U.S. military interventions in various regions.
In 2025, it saw a notable increase of 12.7% against the dollar. Recently, the currency reached an 11-year peak against the dollar but has begun to stabilize around those levels.
“Increased geopolitical tensions lead to added uncertainty,” noted Martin Schlegel, the President of the Swiss National Bank, during a recent discussion at the World Economic Forum in Davos.
“This situation isn’t particularly favorable for the Swiss franc or for Switzerland itself. The franc’s appeal as a safe-haven asset means it tends to rise in uncertain times, which complicates the monetary policy for the Swiss National Bank.”
Switzerland, unlike some regional powers, is grappling with slow price growth. A stronger franc could further contribute to disinflationary pressures on its export-driven economy.
Giuliano Bianchi, a co-founder of EHL Hospitality Business School’s Quantitas Institute, explained, “The robustness of the Swiss franc arises partly from the relatively inelastic demand for various Swiss exports.”
He highlighted that in key sectors—like pharmaceuticals and high-value services—the currency’s rise has not diminished external demand, which looks to undermine the mechanism that stabilizes exchange rates.
“This presents challenges for the Swiss central bank, as a strong franc could limit imported inflation when inflation is already stable, thus squeezing the profits of exporters and impacting wages and investment,” he added.
With inflation currently at just 0.1% and the Swiss National Bank’s policy rate sitting at 0%, the country teeters on the edge of disinflation and the possibility of negative interest rates.
While the Swiss National Bank ended a seven-year stretch of negative interest rates back in 2022, such rates are unpopular among savers and banks alike due to their impact on savings and institutional profits.
“The threshold for heading into negative rates is steeper now, but if it comes to that, we will have to go there,” Schlegel affirmed during his chat with CNBC.
Limitations of Policy Tools
In the past, the Swiss central bank has intervened in forex markets by selling francs and buying foreign currencies to temper the franc’s strength.
However, doing so could be precarious right after the country negotiated a trade deal that significantly reduced tariffs imposed during the Trump era.
Last year, the Trump administration had enforced heavy tariffs to counter what it labeled as currency manipulation and trade barriers from other countries, placing Switzerland on a “watch list” due to concerns over its macroeconomic policies.
Recently, during a speech at Davos, Trump mentioned that tariffs on Switzerland were raised from 31% to 39% at that time because the former Swiss President “pushed me in the wrong direction.” This places Switzerland in a delicate position regarding interactions with the U.S. administration.
In the long term, the Swiss franc stands as the strongest currency globally and is likely to maintain its resilience this year.
Lloyd Harris
Head of Fixed Income at Premier Mitten Investors
Lloyd Harris, responsible for fixed income at Premier Mitten Investors, suggested that the franc’s reputation as a stable asset is likely to sustain its upward path, regardless of the Swiss central bank’s actions.
“From a long-term standpoint, the Swiss franc is the strongest currency in the world, and it is expected to remain consistent this year,” he mentioned in an email to CNBC.
“Factors supporting this include gold pricing, Switzerland’s status as a safe haven amid geopolitical unrest, and a steady current account surplus. While the SNB may intervene if the currency strengthens too much, we don’t foresee substantial changes that would allow the franc to outpace the U.S. dollar in the medium term.”
Claudio Suffredo, an economics PhD and adjunct professor at EHL, remarked that historical trends indicate that inflows into safe-haven assets can fortify the franc, even if the Swiss central bank employs strategies like decreasing interest rates to manage its growth.
“However, with mounting political sensitivities surrounding currency interventions, the Swiss central bank’s options become more constrained, and the balance between maintaining price stability and fostering growth has intensified,” he observed.
Despite these challenges, Schlegel assured at Davos that the SNB would take necessary actions, even at the potential expense of U.S. government displeasure.
“We’re prepared to step into the forex market if required,” he stated.
