Happy and prosperous New Year to the EUR CHF

A Vignette?

To start this new year, a little reminder for those of you who only travel using "soft mobility." You have until January 31st to purchase your Swiss vignette. It is available for sale at 40 francs in all Ben S Shop and Change exchange offices.

EUR CHF in 2025

Is this the best time to take advantage of the Swiss franc exchange rate, which remains stable against the euro despite the latter's decline against the US dollar? Will the euro drag the Swiss franc down with it, given the extremely low Swiss key interest rates? Will the Swiss franc continue to be subject to "carry trade" operations, causing mass purchases of Swiss currency and increasing pressure on the EUR CHF? Or will the Swiss National Bank manage to stabilize the Swiss franc against the euro through interest rate adjustments and interventions in the foreign exchange markets?

Swiss Franc Exchange Rates According to Some Experts

While Matthias Geissbühler, a Forex expert at Raiffeisen, believes that the Swiss franc should quickly reach 0.9100 EUR CHF, the Swiss National Bank has been intervening for several months to curb the rise of the Swiss franc against a weakened European partner. In October, the institution injected 750 million Swiss francs into the foreign exchange markets to limit the appreciation of the Swiss franc and replenish its foreign reserves. This is a small amount considering its past interventions. If Raiffeisen's scenario is confirmed and the Swiss National Bank can no longer maintain the exchange rate of its currency, Swiss companies would suffer the consequences.

The prospect of a protectionist American trade policy, the emerging political instability in Europe, and the decline in industrial production are weakening Europe and making the euro less attractive. Switzerland's immediate partner now has "feet of clay." The lack of outlets for Swiss companies facing high raw material costs is already leading some to consider partial layoffs. Some companies are showing resilience and have adapted their strategies well to the current situation. Fortunately, the service sector has not been affected so far and seems poised for growth in 2025 according to industry experts.

Another Analyst's Opinion.

If the euro weakens in the foreign exchange markets, the US dollar remains strong against the Swiss franc. A strong American economy and the Federal Reserve's monetary policy allow the Swiss industry to mitigate exchange rate risks through exports to its primary partner, the United States. The dollar has appreciated by 5% since the American election against the Swiss franc, 6% against the euro, enabling these companies to offset some of the losses in their trade with Europe. According to Manuel Feirreira, Chief Economist at the Zurich Cantonal Bank, estimates predict an average USD CHF exchange rate of 0.8700 for 2025, which is less favorable for Swiss economic actors who depend on a global economic recovery, which, apart from the United States, is still pending.

Ups and Downs.

Before the dramatic decrease in the Swiss National Bank's key interest rates, the Swiss franc had peaked in early December at 0.9260 EUR CHF. However, the national bank's decision anchored the average exchange rate of the Swiss franc around 0.9400 EUR CHF, a level it has hovered around since then. Far from the consistently strong exchange rates of the Swiss franc, the crisis shaking Great Britain has pushed borrowing costs and bank interest rates in the United Kingdom to their highest levels since 1998. The British pound has weakened against the US dollar to a floor not seen in a year. This situation raises concerns for British mortgage loans. Prime Minister Reeves has been heavily criticized for increasing taxes by 30 billion pounds (33.6 billion francs) and borrowing 40 billion pounds after making contrary promises to the Labour government. If Great Britain is no longer part of Europe, another major European country is currently in great difficulty. If you invest or travel to Great Britain, the bill will be less harsh. The British pound is at a more favorable exchange rate.

Resilient Swiss Franc

In the face of the situation in all these European countries, with political difficulties, complex economic and budgetary management, and repeated mistakes by politicians and many European leaders, Switzerland stands out as a model of stability. In contrast, the Swiss franc remains close to its historical highs. But everything is changing very quickly on the international stage.

What to Expect from the Swiss Franc in 2025?

The consensus among financial experts, who anticipate a rise in the Swiss franc due to the weak immediate environment, takes into account the inflationary risk of Donald Trump's policies. The Fed might abandon its interest rate easing program to cope. However, various factors can influence the Swiss economy and the safe-haven role of the franc. Foremost among these is the announced or expected end of conflicts in Ukraine and the Middle East. Peace between Ukraine and Russia would considerably strengthen the EUR CHF, bringing some semblance of stability to the continent. The unknown factor is the aggressive policy of the American president, whose decisions could impact business affairs. The threats and intimidations he imposes in many areas, including the forcible annexation of Canada and Greenland, etc., and customs barriers against Europe, especially if it doesn't purchase more American oil, are both a leap into the unknown and a way to unlock frozen situations like the war in Ukraine, for example.

The question then arises, in a declining Europe, whether the Swiss enclave will maintain its image of stability and security, or if the Swiss economy will be weakened by a lack of demand compared to the ultra-high-quality supply it provides. 2025 is a pivotal year for Switzerland and the Swiss franc as a safe haven.

Lol!

Let's reassure ourselves, President Trump has not yet demanded that Switzerland become the 52nd, 53rd, or 54th state of the United States, which currently has 50.

According to Tobias Knoblich, the Swiss franc will continue to be in demand in 2025 to mitigate political uncertainties. Purchases and travels would then benefit from very favorable exchange rates, including for cross-border workers who convert their salaries into euros.

EUR CHF Week

EUR CHF

The euro opened at 0.9378 Swiss francs this Monday. After encountering resistance on Tuesday, the so-called "single" currency reached a weekly high of 0.9438 before retracing to settle again around its base of 0.9400 EUR CHF. The currency pair is therefore stable while awaiting results and the effects of the future US president's policies.

At the time of writing, the EUR CHF stands at 0.9418 EUR CHF, 100 pips higher than during our last analysis of the EUR CHF pair.

USD CHF

Movements are more volatile for the dollar against the franc. After starting the week at 0.9097 USD CHF, the greenback plunged below the 0.9010 USD CHF threshold before rising back to near current levels with a strong dollar trading around 0.9192 USD CHF. The dollar is now 150 pips stronger than where we left it. A strong dollar remains good for Swiss exports but not necessarily for the balance of payments. Can imported inflation reappear?

Markets and Commodities

There has been a modest rebound for European stocks, interrupted on Wednesday by rumors from CNN: Donald Trump might declare a state of emergency to lift extremely high customs barriers against the rest of the world. The news did not significantly disrupt the SMI, which has been progressing all week. The Dow Jones fell by 100 points to 42,635, and the Nasdaq dropped by 400 points, led by Nvidia, which declined by 6%, and Tesla, from 410 to 394 after reaching a high of $485 on December 16th. Let's hope that after the inauguration, Elon Musk's companies will gain value in the technology sector.

The Swiss SMI has recorded its seventh consecutive session of gains since the beginning of the year, contrasting with fears for the Swiss economy dependent on its clients.

Across the Atlantic, a Fed meeting ended with a cold shower for investors who were hoping for a monetary policy of interest rate cuts. The Fed has put an end to any suspense in the face of current and upcoming inflationary pressures and the effects of the policy promised by Donald Trump. This leaves the European Central Bank free to lower its rates and support businesses in the old continent. This promises further declines in the euro, which is currently above the 1.0280 mark against the dollar. Investors now anticipate only two rate cuts for the entire year. However, in case of a return of inflation, these forecasts would become optimistic. In China, there are still no signs of an economic restart despite numerous stimulus plans. Beijing is supporting the Yuan renminbi and anticipating a deflation risk with inflation currently at 0.1%. Authorities must deal with the opposite problem of the United States.

SMI

Some Recommendations?

Ben S Solutions for currency exchange does not associate itself in any way with these recommendations. They have been noted based on opinions issued by the mentioned institutions:

Compagnie Financière Richemont is recommended by Royal Bank of Scotland, which sets a target price of 145 Swiss francs.

Lindt is downgraded from outperformance to underperformance, losing 1.80%, as noted by Bernstein.

To stay in chocolate, among other things, Bernstein again reduces Nestlé's target price from 80 to 73 Swiss francs.

Finally, for UBS, Kepler Cheuvreux recommends buying.

Once again, all these recommendations are only binding for the institutions that issued them. Ben S Solutions for Change does not issue any opinions or recommendations on the stock market performance of these securities.

In the Swiss market, Sika has announced an increase in its market shares and growth, according to Thomas Hasler. Sales have soared to 11.7 billion Swiss francs, a 7.4% increase. The company's strategic positioning has allowed penetration into the sector's environment. Many Swiss companies like Sika have positioned themselves directly in the heart of the American market, rendering forthcoming sanctions from Donald Trump ineffective. Despite these announcements, the stock has not performed well in recent weeks.

On December 20th, the day of our last analysis, the SMI was at 11,300 points. It is performing better just below 12,000 points now. Since then, Roche and Lonza, Partners Group, and UBS have performed over 6% in a month.

The Roche group is acquiring Poseida Therapeutics, taking control for a total of 1.5 billion Swiss francs. The biopharmaceutical's shares will cease to be traded on Nasdaq once the operation is completed. 

Hydrocarbon Prices

We left off with the oil price at $73 per barrel. Brent crude oil in the North Sea is priced $4 higher, and the dollar is more expensive. This continues to weigh on the profitability of Swiss and European companies. However, OPEC+ has revised downward the 2025 demand forecast against a backdrop of slowing global growth and an expected increase in production by 1.9 million barrels per day, despite the extension of production cuts by member countries. The "fault" lies with the United States. If you are panicking these days due to rising barrel prices, bear with it.

The cold wave covering the northern United States with a white blanket has pushed prices up despite excess stocks, and the risk of deflation in China, whose economy is still slowing, has not improved the situation for oil companies.

Natural gas prices, on the other hand, will convince even the most reluctant to switch to alternative energy sources, except in very energy-intensive sectors, such as glass manufacturing, where gas is irreplaceable. The megawatt-hour price has increased by 35%, rising from $2.70 to $3.70 in three months! Recent events related to the war in Ukraine are the main reason.

Gold

Gold prices remain on the rise. The yellow metal has increased by $50 since our last analysis, reaching $2,675 per ounce. The Vreneli and Napoleon coins have slightly risen to 453 francs per unit in good condition. A 1-kilogram pure 999 milligram gold bar is worth 78,400, which is 4,000 Swiss francs more than before the holidays. Gold remains a relatively safe alternative haven. While the United States leads all rankings with 8,133 tonnes of gold reserves, Switzerland holds 1,040 tonnes of gold, stored mainly in Switzerland but also at the Bank of England and in Canada. This represents 81 billion francs, equivalent to all Swiss francs in circulation worldwide. Germany surpasses it with 3,300 tonnes and France with 2,400 tonnes of gold.

BTC and Co

While the price of gold progresses, the bitcoin price, after surpassing the $100,000 mark on Monday to a high of $102,400, has fallen back due to the strength of the American economy and the increasing likelihood that the Federal Reserve will maintain its rates at the end of the month. The trend weighs on risky investments as Bitcoin has lost nearly 10%. However, Donald Trump's accession to the Oval Office, who is known to be favorable to the world of cryptocurrencies and wants to establish a digital currencies secretariat, could relaunch Bitcoin well beyond $100,000.

One Bitcoin is currently worth $94,500, which is 86,200 Swiss francs at Friday's exchange rate.

Billions in Bonuses for Switzerland

As Swiss inflation falls again to 0.1% in December, increasing the likelihood of another rate cut, the Swiss National Bank has totaled, according to UBS experts, 80 billion Swiss francs in profits. Under the agreements made, the SNB should transfer 3 billion Swiss francs to the Confederation and the cantons. This is a welcome influx for their budgets during a pivotal period full of uncertainties. The SNB will need to repay 53 billion francs in exchange losses accumulated in 2023, used among other things to regulate and control the Swiss franc's exchange rates against a wide range of foreign currencies, while the Swiss franc played an exacerbated role as a safe haven. This amount is therefore to be deducted from the 80 billion in profits. We will know the details next week as the institution will announce its results and their allocation. We will meet again next week. There is no doubt this will impact the EUR CHF exchange rates when you convert your Swiss francs to euros at exchange offices or on digital exchange platforms.

In the meantime, a beautiful sunny Sunday awaits us. Keep your spirits up.

Things to Do in Geneva and Surroundings

A bit of tourism? You can download the https://www.geneve.ch/agenda/musee-ciel-ouvert app to discover 300 major works of art in the city of Geneva. A digital guide that will have you walking from curiosities to artworks based on your endurance and motivation.

Still outdoors, escape game enthusiasts can choose between the old town and the Bastions Park. From 9:00 AM to 7:00 PM, embark on an adventure with friends or family and try to solve the puzzles. The following link will take you there: https://www.alea-escape.com/

Staying warm in Bonneville, Haute Savoie, enjoy a High Intensity evening concert to start the year with music. Local bands promise to light up the stage this Saturday from 7 PM. And to top it off, the show is free. Meet us at the Sc'art venue at 137 Av. Pierre Mendès France in Bonneville.

This won't stop you from enjoying the Great VVF Odyssey, Europe's first dog sledding event, which will take place in the prestigious setting of Megève and over dozens of kilometers of trails. 68 mushers from 8 nations will cover 400 km all gathered together. The address is Cote 2000, 3460 Route de la Côte 2000, 74120 Megève. For more information, contact the tourist office.

That's it for this eventful return, except for the EUR CHF. We will meet again next week for a new weekly analysis of the EUR CHF pair. The entire editorial team of Ben S Solutions for Change joins me in reiterating our best wishes and wishing you a pleasant weekend.

X.C.