Swiss franc nearing all-time high against euro due to Middle East crisis

Keystone / Martin Meissner

The franc has risen in recent days to its highest value against the euro in a year and is approaching an all-time high. A very uncertain international situation in the Middle East is pushing investors towards safer positions.

On Friday evening, the exchange rate against the euro fell as low as 0.9457. One has to go back to September 2022 to find a lower euro value (0.9409), a rate that represents the absolute minimum in the history of exchange rates between the two currencies. This morning the euro changed hands between 0.9486 and 0.9502.

According to market players, there is a rush to so-called safe haven assets, such as the Swiss franc. It is not yet clear how long this phase will last: such episodes are usually short-lived, says an analyst at Commerzbank. “But as long as there is a danger of a ground offensive by the Israeli army in Gaza and as long as it is not clear how the Arab states will react, it is probably too early to give up on the new risk stance”.

Historical comparison

The euro (in actual monetary circulation since 2002) hit its all-time high against the franc in 2007 at CHF 1.7146. These were the days of the so-called “super-euro”, which according to its supporters was preparing to replace the dollar as the world’s reference currency. The subsequent global economic and financial crisis, later aggravated by the European sovereign debt crisis, sharply reduced the value of the European Union’s currency, reinforcing the franc’s role as a safe haven value.

A reputation, however, that was only built up after a long time. The Swiss franc is in fact over 170 years old: it was created in 1850 and was then geared to the French system. The first coins were minted in Paris: the Federal Mint in Bern only came into operation in 1853. And at the time there were probably not many who bet that the currency of a neutral state would one day become more valuable than that of neighbouring great powers.

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