Morgan Stanley Says Swiss Franc Is the Most Gold-Like Safe-Haven Currency, Could Surge 17% Against the US Dollar
Morgan Stanley strategists stated that amid the backdrop of US policy uncertainty, as market confidence in the Swiss franc’s status as a safe-haven currency strengthens, the Swiss franc could appreciate by as much as 17% against the US dollar.
In a report led by David Adams, strategists wrote that Switzerland’s low inflation, fiscal soundness, and asset safety make the Swiss franc “arguably the most ‘gold-like’ safe-haven currency.”
They mentioned that in a “pessimistic scenario,” the US dollar could drop to a historic low of 0.64 against the Swiss franc. On Monday, the exchange rate was trading near 0.776.
Adams said, “The Swiss franc is an overlooked and undervalued safe-haven asset, and its appreciation in both magnitude and speed is likely to exceed investors’ expectations or market pricing.” He added that the Swiss franc is “the most resilient” safe-haven asset, with the best historical track record of outperforming during market shocks.
This view emerges as hedge funds are also betting on the strength of the Swiss franc. According to the latest weekly data from the US Commodity Futures Trading Commission, leveraged funds currently hold the largest net long position in the Swiss franc since June, whereas they held net short positions just a week earlier.
Last month, the Swiss franc rose to its strongest levels in over a decade against both the euro and the US dollar. Investors are drawn by Switzerland’s moderate debt levels, stable economy, and predictable policies, viewing it as a contrast to the policy chaos in the US, while geopolitical risks are also rising.
Although the strengthening of the Swiss franc increases the risk that the Swiss National Bank may intervene in the market to suppress the exchange rate and curb domestic deflationary pressures, more and more economists acknowledge that monetary authorities currently seem less willing to intervene in the franc’s strength.
Morgan Stanley expects the Swiss franc to continue strengthening against other currencies and predicts its rise against the euro by 5%, from the current level of about 1 euro to 0.91 francs to 1 euro to 0.87 francs.
Editor: Chen Yujia
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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