The Swiss Franc Is Too Strong. Is It Still Worth Owning?

Disclaimer: This is not investment advice. Think carefully before acting. I use this site for thought experiments, every claim is open to dispute, and I accept no responsibility for anyone's investment result.

The Swiss franc has been one of the few major currencies to move against the prevailing tide in 2025. It strengthened against both the dollar and the euro, gaining more than 11 percent against the dollar in the first half of the year. That was its strongest start since 2011.

Why has the franc become so strong? What does that strength do to Switzerland? And is CHF still a useful safe-haven asset, or has the haven itself become too expensive?

From a chaos of coins to one franc

Before the nineteenth century, Switzerland had more than seventy-five coin-issuing units. The result was exactly the confusion one would expect. In 1850, the federation imposed a common currency and introduced a franc containing 4.5 grams of pure silver, equal in value to the French franc.

Switzerland joined the Latin Monetary Union in 1865. The arrangement lasted until the union's final dissolution in 1927, while the franc itself remained relatively stable through the period from 1850 to 1936.

After the Second World War, the franc entered the Bretton Woods system and remained within it until 1970. A statutory gold-backing requirement had supported the currency from the 1920s. A referendum removed that link in 2000 and completed the franc's transition into a fiat currency.

Its safe-haven status was built gradually. Switzerland combined neutrality, political stability and, for long periods, interest rates above those elsewhere in Europe. It became an interest-rate island and a natural refuge for capital.

Why the franc became so strong again

1. Uncertainty revived demand for safety

War, political risk and trade uncertainty pushed international money toward assets perceived as safe. The franc was an obvious destination.

2. The United States and Europe eased policy

The Federal Reserve and the European Central Bank cut rates during 2024 and 2025, putting pressure on the dollar and the euro. The Swiss National Bank also reduced its policy rate to zero, but the relative change in rates still improved the franc's appeal.

3. The SNB looked less eager to fight the exchange rate

The Swiss National Bank continued to warn about excessive appreciation, but its actual intervention appeared more restrained than in earlier periods. Markets began to believe it might tolerate a stronger currency. That belief became another reason to buy.

What an expensive franc does to Switzerland

There are real benefits.

Imports become cheaper, which helps contain inflation.

Low interest rates make financing easier for households and some businesses.

Swiss assets become more attractive to foreign investors seeking defense rather than excitement.

The costs are just as real.

Exporters lose competitiveness. Pharmaceutical, machinery and watch companies either cut prices or absorb the currency move in their margins.

Deflation risk returns. Swiss annual inflation fell to minus 0.1 percent in May 2025, reviving concern about a longer period of falling prices.

The financial system comes under pressure. Zero or negative rates squeeze banks and make life harder for insurers and pension funds that need reliable returns.

Is the franc still worth owning?

Yes, in my view, but as a hedge rather than a trade.

The argument for owning it is straightforward. The franc has a long record as one of the world's strongest safe-haven currencies. Its near-term appreciation trend had not yet disappeared. In a world where governments keep weakening their currencies, CHF remains a scarce anchor.

But the risks are not theoretical.

The SNB can intervene aggressively at any time. A return to negative rates combined with large foreign-exchange purchases could push the franc down hard. That retreat might create a better entry point, but it would still hurt anyone who bought at the top.

An excessively strong franc is also provoking opposition from Swiss exporters and politicians. Pressure for a policy reversal is rising.

Finally, a zero or negative yield is a holding cost. Cash can come with bank fees or an explicit negative rate.

For someone already exposed to renminbi or U.S. dollar assets, a position in Swiss francs or franc-denominated assets can be an excellent counterweight. I would seriously consider it for that purpose. If the plan is simply to speculate on the currency, however, I would think twice. I am not a professional foreign-exchange trader, and this is not a forgiving market for tourists.