Swiss franc strengthens as euro weakness revives safe-haven demand

The franc has climbed to its strongest level against the euro since early July. On Thursday afternoon, the euro slipped below CHF 0.92, extending a move that has gathered pace as political uncertainty in France weighs on the single currency.

At the start of October, one euro cost almost CHF 0.95. The franc has also gained against the US dollar: a dollar recently traded at CHF 0.82, compared with almost CHF 0.84 at times earlier this month.

The renewed demand marks a turn after several months when investors showed less interest in the franc. The immediate pressure is coming from Europe, where concerns over French public finances and political turmoil have shaken confidence in the euro. The shift puts the Swiss currency back in its familiar role as a refuge when investors grow uneasy about risks in the eurozone.

France’s bond-market pressures have become a key source of concern for currency investors. Financial markets are watching the country’s high and rising debt, continued political uncertainty and unrest, as well as next year’s presidential election.

The strain is visible in borrowing costs. Yields on French government bonds now exceed those of former problem countries such as Greece and Italy. For 10-year bonds, the gap between French and comparable German yields has reached nearly 1.7 percentage points, its widest in 15 years.

France is the EU’s second most important country after Germany, according to the report, so the political and fiscal tensions are feeding broader uncertainty about the bloc. Valiant Bank said ongoing protests were doing little to inspire confidence. Its foreign-exchange commentary pointed to the costs attached to some protest demands as a concern for markets.

A shift in interest-rate expectations helped set up the franc’s latest rebound. A few weeks ago, the widening rate gap between the eurozone and the dollar zone had been a main reason the franc weakened. The Swiss National Bank kept its key rate at zero, supported by persistently low inflation, while the European Central Bank and the US Federal Reserve had recently raised their rates.

That backdrop had favored the euro and dollar. Sentiment has since reversed as political and debt concerns in France have taken precedence for investors. The euro’s decline shows how quickly currency markets can change direction when the risks investors focus on shift.

Even with short-term interest-rate differences still favoring the euro, analysts expect downside risks to remain in the coming weeks. The franc’s renewed appeal reflects demand for a Swiss refuge as uncertainty grows around Europe’s largest political and economic questions.

UBP analysts see a possible medium-term rate just below CHF 0.90 per euro. Their outlook reflects persistent risks around France, with pressure potentially intensifying as markets look towards 2027. The euro-franc exchange rate is increasingly acting as a barometer of risk within the eurozone, the private bank said.

The franc’s safe-haven role has returned after a stretch of weaker demand. If concerns over French debt and political uncertainty continue, investors may direct more money into Switzerland’s currency. The shift comes even though short-term interest-rate differences remain favourable to the euro.

For Swiss households and businesses, the reported exchange-rate move is clear: the euro and dollar now buy fewer francs than they did at the start of the month. Market attention will remain on French political developments and the bond-market signals that have helped bring the franc back into focus.