As gold and silver set new record highs day after day, roiling the asset market, the Swiss franc is quietly asserting a powerful presence in global finance. As confidence in the U.S. dollar and the Japanese yen—long viewed as the bywords for safe assets—wanes at the same time, footloose global capital is rapidly flocking to Switzerland, the last refuge among major currencies.
On the 29th, the Swiss franc in the global foreign exchange market showed a record rally reminiscent of the eurozone debt crisis in 2011. The franc appreciated 12%–14% against the U.S. dollar over the past year. It then jumped more than 3% more in just one month this year. As of the 28th, the dollar-franc rate in intraday trading fell to 0.7612 francs per dollar. This is a record high in about 14 years and 5 months since Aug. 2011 (the franc's appreciation against the U.S. dollar).
Given that during the same period gold has topped $5,000 per ounce and silver has also entered record-high territory, the Swiss franc is being treated as the only currency asset standing shoulder to shoulder with the real assets of gold and silver. The Financial Times (FT) noted this was a phenomenon arising as "investors harbor doubts about the dollar and the yen as alternatives."
Investors' particular enthusiasm for the Swiss franc stems from Switzerland's political and fiscal stability. U.S. national liabilities are around 120% of gross domestic product (GDP), and the eurozone (the 20 countries that use the euro) averages around 90%. By contrast, Switzerland's general government debt ratio stands at about 40%. Its current account has long remained in surplus at 7%–10% of GDP, securing both fiscal and external soundness. This has increased confidence that the currency's value will not plunge even in a crisis.
Global investment banks MUFG and UBS said in recent reports that "the Swiss franc is currently the strongest value-preserving currency on the planet." The Wall Street Journal (WSJ) reported that the key factor determining currency value has become not how much money is printed, but how trustworthy a country's system is.
In the past, the Swiss franc was strongly associated with secret accounts hiding illicit funds. But since 2018, as Switzerland began automatically exchanging financial account information with foreign tax authorities, the kind of illegal fund concealment seen before has become virtually impossible. Even so, demand for francs is being driven not by black money but by high-quality institutional funds such as pensions and sovereign wealth funds. In fact, large Canadian institutional investor Investment Management Corporation of Ontario (IMCO) publicly identified the Swiss franc as an alternative destination after dollar stability was shaken by President Trump's policies. Pension & Investments, a pension-specialized outlet, assessed that this trend is not driven by individual speculative demand but by strategic choices of major wealthy investors and institutions worldwide.
Another reason funds are flowing into the Swiss franc is that the Japanese yen, a traditional competitor among safe assets, is not fulfilling its role. Japan's national liabilities, around 250% of GDP, and the side effects of prolonged ultra-low interest rates have eroded the belief in the foreign exchange market that the yen is a "risk-free asset." As the yen weakens, investors reduce its weight in safe-asset portfolios and choose the Swiss franc as an alternative, major outlets said. The Financial Times (FT) said, "As the yen's safe-asset status wobbles, the Swiss franc has been left as virtually the only currency refuge for global investors."
Given these conditions, the Swiss central bank is mired in a dilemma. The stronger the franc, the weaker the price competitiveness of Swiss products, hurting export corporations. Ultimately, a deflation risk could emerge. Switzerland's inflation rate is already in the low 0% range. If the franc rises further, even the possibility of reentering negative rates is being discussed. Negative rates mean a measure under which commercial banks pay a custody fee rather than receive interest when depositing funds at the Central Bank.
Thomas Jordan, president of the Swiss National Bank (SNB), said in a CNBC interview on the 28th that "the franc's strength is making the conduct of monetary policy very complex," hinting at the possibility of reintroducing negative rates. The SNB previously operated negative rates from Jan. 2015 to Sept. 2022.
However, experts predicted that unless the direction of the Trump administration's dollar policy becomes clear and geopolitical risks subside, the Swiss franc's solo run is likely to continue for the time being. Generally, when a Central Bank cuts rates, it often leads to currency weakness. But in cases like Switzerland, where policy credibility is high, the Central Bank's proactive response itself can reinforce the franc's safe-asset image.