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The franc has lost some of its luster in recent weeks. At 1.0856 francs, the euro is more expensive than since the beginning of June. However, experts speak of a normal market reaction.
The Swiss franc is traditionally considered a safe haven in tough times. But when the clouds of a crisis clear again, investors always again leave the safe haven and seek happiness in riskier investments that promise better returns, such as stocks.
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In contrast, the dollar has performed less spectacularly against the Swiss franc. As the world’s most important reserve currency, the dollar is also a safe haven. Since Swiss francs are sold as US dollars, the exchange rate has only moved slightly to 0.9127.
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Thomas Stucki, an investment strategist at St. Galler Kantonalbank, put the move in perspective Wednesday: “This is pure market development.” “The crown crisis is expected to come to an end at some point,” Stucki said at one event.
This speaks for the euro. The common currency is “generally a little stronger” in “simpler” times. At the same time, the expert ruled out that the Swiss National Bank was behind the movement with interventions.
Diminishing uncertainty weighs on Swiss francs
In fact, the recent downward trend of the Swiss franc against the euro began with Joe Biden’s victory in the US presidential election and the first news of the success of a vaccine. Then it was accentuated by the successes of other vaccine and drug manufacturers.
More recently, the President of the United States, Donald Trump, announced that he would step down when he would relinquish office to his successor. The world’s leading stock exchange on Wall Street set new course records, and the Swiss franc fell slightly more against the euro.
However, Stucki does not expect major changes in exchange rates in the coming year. In 2021, the euro could even trend slightly lower against the Swiss franc and the dollar, on the other hand, slightly higher. However, the dollar is unlikely to reach parity with the Swiss franc.
Valiant Bank sees it differently. For them, the diver of the franc against the euro is “late in catching up”. In the medium and long term, the euro has broken a downtrend for two and a half years. In the coming months, the euro could rise to more than 1.10 and later even to 1.12 francs.
With all the fluctuations, it should not be overlooked that the dollar is involved in 88 percent of all currency transactions. The Swiss franc, on the other hand, only has a stake of about 5 percent. This means that the franc is also one of the most vigorously traded currencies, but it is generally only a minor element in global currency trading. Therefore, the franc rate is likely to be strongly influenced by the evolution of the euro against the dollar.
pre / ra
(awp)
