Dan AtkinsonCurrently at $1.03 against the dollar, the franc traded at $1.02 a month ago, on 20 December, and $1 a year ago, on 20 January 2019. Its low point during the last 12 months was seen on 4 May 2019, when it stood at $0.98 and the peak occurred on 11 December, at $1.03.
Against the euro, it is currently €0.93. A month ago, on 20 December, it changed hands at €0.92 and a year ago, on 20 January 2019, it was worth €0.88.That was its low point during the past 12 months, while the peak was seen on 19 January this year, at €0.93.
Against sterling, it is trading at £0.79. One month ago, on 20 December it was worth £0.78 while a year ago, on 20 January 2019, it stood at the same level, £0.78. Its high point against sterling during the last 12 months was seen on 12 August last year, at £0.85 while the trough occurred on 12 December at £0.75.
Aligned with the EU
The highs and lows suggest momentum is behind the Swiss franc in terms of the euro and the dollar, but not against the pound. This may well be connected with the lifting of political uncertainty in the UK following the December election, leading to an upward revaluation of sterling.
The Swiss franc is, famously, the “hardest” currency in the world in terms of keeping its value. In the post-war period, it shared this position with the Venezuelan bolivar, but with inflation in that country running at the end of last year at more than 4,600%, the franc no longer faces competition from this source.
Trade US Dollar / Swiss Franc CFD
The Swiss paradox is that, despite guarding jealously its sovereignty, the country’s economy is greatly dependent on the euro-zone and the broader European Union. For this reason, it has aligned many of its regulations with those of the EU.
In its most recent Article IV health check, the International Monetary Fund (IMF) declared: “The Swiss economy has performed relatively well in recent years. Buoyant external demand in early 2018 lifted GDP [gross domestic product] growth to 2½% last year, despite a slowdown in the second half on weaker global trade and one-off factors.”
“Exceptional infrastructure”
It added: “Inflation has remained muted, despite a period of rising energy prices and depreciation of the franc in mid-2018, owing to subdued domestically-sourced inflation. Over the medium term, inflation is expected to remain around the mid-point of the Swiss National Bank’s 0–2% price stability objective. The current account surplus, which rose to 10.2% of GDP in 2018 on recovery in primary income, is expected to remain broadly unchanged. Overall, policies have been supportive of growth.”
In its assessment of the Swiss economy, America’s Central intelligence Agency describes Switzerland as “a prosperous and modern market economy with low unemployment, a highly skilled labour force, and a per capita GDP among the highest in the world”.
It adds: “Switzerland's economy benefits from a highly developed service sector, led by financial services, and a manufacturing industry that specialises in high-technology, knowledge-based production. Its economic and political stability, transparent legal system, exceptional infrastructure, efficient capital markets, and low corporate tax rates also make Switzerland one of the world's most competitive economies.”
