Swiss Franc: Funding role versus haven status – Rabobank

Rabobank’s Senior FX Strategist Jane Foley discusses whether the Swiss Franc (CHF) will shift from safe haven to funding currency status. Foley highlights Swiss National Bank (SNB) intervention during the Iran war, subdued Swiss inflation, and a zero policy rate. Foley notes CHF underperformance in G10 and warns that Eurozone political risks, including the French Presidential election, could still trigger safe haven inflows.

Franc caught between two roles

"In March 2026, close to the start of the Iran war, the SNB intervened to halt a wave of safe haven inflows into the CHF. The move helped arrest a surge in the value of the CHF, which is a well-established safe haven currency. Since then, its safe haven appeal has been diminished."

"Measured since the start of the war, the CHF is the second worst performing G10 currency after the SEK. Notably, neither Sweden’s Riksbank nor the SNB are currently worried about sticky inflation pressures."

"Counter to many other G10 central banks, the market sees little risk of a SNB rate hike this year. Given that the SNB policy rate is at zero, this raises the prospect of the CHF adopting funding currency status. The market, however, would have to square this with the prospect that the CHF could see a surge in long positions if market anxieties rise."

"If the BoJ uses its policy meeting on September 18 to indicate that the pace of policy tightening in Japan will accelerate going forward, the market will likely continue to evaluate alternative funding currencies. Given very low interest rates in Switzerland, the CHF may be an attractive alternative to some investors, though the currency’s well-established status as a safe haven will likely deter others."

"Given that next year will bring the French Presidential election and the prospect of a victory by the far-right, this may be a risk that many market participants may be wary about."