Swiss Franc Climbs High: November 2023's Financial Outlook
In November, the Swiss franc reached 0.88 against the US dollar, marking its strongest position in over two months. This rise was primarily influenced by the widespread weakening of the dollar, spurred by a series of weaker economic indicators. These indicators have led to increased speculation that the Federal Reserve might start reducing interest rates by the second quarter of 2024.
Within Switzerland, the economic landscape also contributed to the franc's trajectory. The country's restrained inflation rate, which remained under 2% for the fifth month running in October, coupled with a stagnating economy, limited the support from monetary policy for the franc. Specifically, the Gross Domestic Product (GDP) of Switzerland showed no growth in the second quarter.
Moreover, the easing of tensions in the geopolitical conflict between Israel and Gaza played a role in reducing the demand for the franc as a safe-haven currency. This situation led to the franc trading near its lowest in four months against the euro. Despite these various factors, the franc is projected to end 2023 stronger against both the dollar and the euro. This strength is largely attributed to the Swiss National Bank's (SNB) reduction in foreign currency reserves, which dropped to their lowest in nearly six years in October. - Source