On September 24, the Swiss National Bank announced the result of its September interest rate decision, and as expected, it kept the rate unchanged at 0.00%.
Following the release of the news, USDCHF surged on the minute-level chart, with the market price rising from 0.8228 to 0.8251, a gain of 23 basis points. Market funds interpreted the hold as bearish news for the Swiss franc, implying a certain degree of rate hike expectations in the market.
Figure 1: Swiss National Bank interest rate and Swiss 10-year government bond yield - ATFX. Since June 2025, the Swiss National Bank has maintained a zero interest rate policy. The 10-year Swiss government bond yield has shown signs of rising during this period, with the latest value at 0.577%, higher than the current benchmark rate. This is also the core basis for market funds expecting a possible rate hike by the Swiss National Bank to some extent.
In contrast, the Bank of Japan began raising rates in 2024 and finally gradually escaped the zero rate. The reason the Bank of Japan dared to raise rates and abandon the zero rate policy is that Japan's commodity demand has recovered significantly, and the CPI annual rate has reached or even exceeded the 2% target for many consecutive years. For the Swiss National Bank, the principle is the same: only when CPI data rises significantly and reaches the target level will there be sufficient reason to abandon the zero rate policy.
The Swiss National Bank subjectively does not want the Swiss franc to continue appreciating against the US dollar or the euro, because this would worsen domestic deflation and also reduce the export competitiveness of Swiss watches, pharmaceuticals, and precision manufacturing. The Swiss National Bank once drove the Swiss franc lower through the extreme measure of abandoning the 1.2 fixed exchange rate floor with the euro. It can be seen that before Swiss inflation reaches the target, the Swiss National Bank not only has no possibility of raising rates, but may even adopt a rare negative interest rate policy.
Figure 2: Overlay of Swiss CPI annual rate and WTI trend - ATFX. Switzerland's inflation rate, like that of the United States, resonates with international oil price trends. The difference is that the United States, affected by rising international oil prices, has an inflation rate as high as 3.4%, while Switzerland, affected by international oil prices, has an inflation rate of only 0.8%. Switzerland is able to maintain a relatively lower inflation rate under the impact of high oil prices because its energy structure is more diversified. In addition to oil and natural gas that all countries have, it also has hydropower and nuclear energy, which greatly reduces the sensitivity of Switzerland's macroeconomy to rising international oil prices.
On the other hand, the Swiss currency has safe-haven properties, and international funds naturally want to buy and hold Swiss francs. The appreciation effect of the Swiss franc offsets a large part of the impact of international crude oil prices. The US dollar is different; it is a typical cyclical currency that fluctuates with the Federal Reserve's monetary policy and the performance of the global economy. Over the long term, with the Swiss National Bank maintaining a zero interest rate policy and Switzerland's domestic inflation rate remaining near 0.00%, the Swiss franc can be regarded as a unique currency with unchanged intrinsic value. This causes USDCHF to move in line with the US dollar index, and to judge its trend, one mainly needs to focus on the Federal Reserve's monetary policy.
ATFX Risk Warning, Disclaimer, and Special Statement: Markets carry risks, and investment requires caution. The above content represents only the analyst's personal views and does not constitute any operational advice. Please do not treat this report as the sole reference basis. At different times, the analyst's views may change, and updated content will not be notified separately.