Banknotes of the Swiss Franc displayed in Lausanne, Switzerland, on December 23, 2025.
Investors often list safe-haven currencies like the US dollar, the Swiss franc, or the Japanese yen. These currencies have historically been expected to hold their value during times of geopolitical or economic instability.
Recently, however, these currencies have shown some volatility. The dollar and yen saw significant drops between 2025 and 2026. Although the franc has appreciated, this presents challenges for Switzerland, which relies heavily on exports and has notably low inflation.
Decline of the Dollar
In 2025, US President Donald Trump altered global trade dynamics through tariffs, leading to a “Sell America” climate affecting the dollar, which is critical on the world stage. The abrupt implementation and removal of additional tariffs have contributed to the dollar’s pressures.
According to a note from Swiss private bank Julius Baer in December, “unstable trade policies” are partly to blame for the dollar’s decline, further highlighting Trump’s “One Big Beautiful Bill Act” that has placed the U.S. in a position of unsustainable debt.
Moreover, the pressure Trump placed on Federal Reserve Chairman Jerome Powell has diminished investor confidence in the dollar. On January 29, the dollar index dropped by 1.3%, marking the largest single-day fall since Trump introduced tariffs in April. This decline led to the dollar reaching its lowest level in about four years, with the index showing a 9.37% drop in 2025 and further losses into 2026.
George Saravelos, from Deutsche Bank, stated in a note that the dollar’s role as a safe haven might be overstated. He questions the idea that the dollar increases in value during periods of risk aversion, noting historical data reflects minimal correlation between the dollar and stock market movements. Cole Smead, from Smead Capital Management, shared his belief that the dollar is likely to continue weakening, referencing previous market patterns that indicated a broader, long-term bearish trend for the dollar.
The dollar index previously experienced a significant drop, around 41% from its peak in 2002 to its lowest value in 2008.
Yen Lacks Yield
The Japanese yen has also faced fluctuations as it enters 2025, with speculation about possible government intervention affecting its position as a safe haven. At the start of 2025, the yen was valued near 156 to the dollar but spiked when the Bank of Japan hinted at potential interest rate hikes. By October, the yen weakened rapidly following the appointment of Prime Minister Sanae Takaichi, whose expansive fiscal policies led to an increase in long-term government bond yields.
Since Takaichi took office, the yen depreciated by about 5.9%. Following an “interest rate check” by the New York Fed in late January, the dollar rose against the yen, nearing 152. However, the yen soon fell to near 157 before regaining strength after positive election results for Takaichi’s party.
Analysts at Citi speculate that the yen will struggle to decline much beyond the 160 level, anticipating potential interventions from both Japanese and U.S. authorities. They predict tensions in the market around this threshold.
Strong Franc
Unlike the dollar or yen, the Swiss franc has benefitted from Switzerland’s political stability, low debt levels, and diverse economy, making it an attractive asset. Over the course of 2025, the franc appreciated approximately 13% against the US dollar, reaching an 11-year high in early 2026. It also marked a similar high against the euro this month.
On January 30, the franc faced some challenges as historical declines in gold and silver prices led to a 30% drop in its value. Investors also withdrew from the franc, contributing to a 1.2% decrease against the dollar. This surge in strength poses risks for Switzerland, particularly as it could prompt intervention from authorities concerned about the franc’s impact on the economy.
In contrast to many developed nations, Switzerland is grappling with low inflation, sitting at just 0.1%, complicating monetary policy for the Swiss National Bank (SNB). The SNB’s current main interest rate is at zero, and a stronger franc could exert additional disinflationary pressures on the export-dependent economy.
Swiss officials have previously implemented market interventions to stabilize the franc’s value. However, past administrations have viewed these interventions as potentially problematic. Recent statements from SNB Chairman Martin Schlegel indicated a readiness to act if necessary. Meanwhile, economists from UBS expect the franc to ease about 2% against the dollar by year-end, yet they do not anticipate significant reactions from the central bank to the current appreciation.
According to a Reuters poll, many analysts predict a 2.2% drop in the dollar against the franc by late April. Experts from financial services firm Everly noted a growing consensus that the dollar and yen are losing their former appeal, while the Swiss franc is cementing its status as a primary safe haven.
Overall, the long-held reputation of the Swiss franc as a robust store of value compared to other major currencies seems to be more solid than ever.
