BofA: Why CHF is so strong — and why it may stay that way ...Middle East

Key Points:

Japan’s JPY no longer holds the ‘safe-haven’ crown:• CHF (and gold) are the standout non-USD hedges today, since the yen has lost credibility as a pure risk-off proxy.• The SNB’s return to zero interest rate policy (ZIRP) has not deterred the market’s appetite for CHF.

The SNB’s policy levers look ineffective:• Verbal interventions have failed.• Physical FX intervention is constrained, partly due to political constraints tied to US tariff tensions.• The SNB’s traditional rate policy cannot offset deep, structural safe-haven flows when investors trust Switzerland’s fiscal prudence while worrying about ballooning deficits elsewhere.

Conclusion:

BofA sees stronger-for-longer CHF as the base case because global capital wants a liquid, credible hedge against fiscal uncertainty — and the franc fills that niche better than almost any other G10 currency today. Unless the SNB adopts more radical FX management tools, efforts to weaken the franc will likely remain ineffective.

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This article was written by Adam Button at www.forexlive.com.

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