Swiss franc surge sparks bets on negative interest rates

The Swiss franc has soared to a decade high against the dollar as investors rush for shelter from the global trade turmoil, sparking bets that the country’s central bank will have to lower interest rates to zero or below to curb the currency’s rise.

The currency, historically a financial market haven because of the Alpine country’s political and economic stability, reached near-record strength against the dollar this week, with the greenback sinking close to CHF0.80 for the first time since the franc’s shock appreciation in 2015.

Deflation risk Yields on short-term government debt have dipped into negative territory in recent days as traders bet that the Swiss National Bank (SNB) will respond with interest rate cuts. Two-year Swiss yields, which reflect expectations for interest rates, traded marginally below zero on Friday.

The rapid appreciation in the franc risks a deflationary shock for Switzerland, say analysts, exacerbated by the growth impact of US President Donald Trump’s trade war.

At 31%, the “reciprocal” tariffs placed on Swiss goods earlier this month — before being suspended for 90 days — exceed the levies on the EU. Switzerland relies on US consumers for more than 10% of exports…

The SNB held rates well below zero for eight years — in part to stop the franc rising too far — before raising them into positive territory in 2022 to combat the burst in inflation that followed the pandemic. “If the SNB is unhappy with the strong franc and constrained on FX interventions, lower rates are the only option,” said Francesco Pesole, FX strategist at ING.….

The EU banking system has used negative interest rates for a long time. I wonder how negative interest rates would go over on the American public?

This is why they want a CBDC. One of the reasons, so they can impose negative interest rates.

2 posted on 04/27/2025 6:53:37 PM PDT by rlmorel ("A people that elect corrupt politicians are not victims...but accomplices." George Orwell)

“The EU banking system has used negative interest rates for a long time. I wonder how negative interest rates would go over on the American public?”

Probably like a lead balloon. I’ll keep my money under the mattress first.

3 posted on 04/27/2025 7:04:22 PM PDT by rellic (No such thing as a moderate Moslem or Democrat )

This is why they want a CBDC. One of the reasons, so they can impose negative interest rates.
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Negative Interest payments also means the depositor pays the bank to store his money, with a CBDC, you will have no way around it.

Exactly. Full control over your finances.

5 posted on 04/28/2025 4:09:27 AM PDT by rlmorel ("A people that elect corrupt politicians are not victims...but accomplices." George Orwell)

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