Synopsis:

Since 2020, the Swiss franc has been the only European currency to appreciate against the US dollar, defying broader trends in FX markets.

Key Points:

• Relative Rate Moves: The Swiss franc closely tracks relative rate differentials, yet it has steadily appreciated since mid-2022 even as rate spreads traded in a range.
• Capital Flows: Unlike Norway, which exports significant capital, Switzerland struggles to recycle inflows, contributing to persistent upward pressure on the franc.
• SNB's Limited Control: Despite the Swiss National Bank's efforts to manage the currency, the franc has continued to strengthen steadily.

Conclusion:

The Swiss franc's appreciation highlights its resilience and unique positioning in the FX market, acting as a counter to other European currencies, such as the NOK. Switzerland's inability to offset capital inflows has made the franc a consistent outperformer, reflecting its safe-haven status and economic stability.