The Swiss franc, often considered a “safe haven” asset, has been gaining value amid market uncertainty, creating challenges for the Swiss economy. In the past, the Swiss National Bank (SNB), the country’s central bank, has intervened in the market to weaken the currency. Although, intervention now risks further disputes with the administration of Donald Trump, which has accused Switzerland of unfair practices.
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“Readiness to intervene has increased.” Switzerland clashes with Donald Trump
The Swiss National Bank (SNB) announced on Thursday that it is maintaining its main interest rate at 0%, as expected. Officials also stated that “given the conflict in the Middle East, the Swiss National Bank’s readiness to intervene in the foreign exchange market has increased.”
“The SNB is thereby counteracting a sharp and excessive appreciation of the Swiss franc, which would jeopardize price stability in Switzerland,” they added.
Dispute with the U.S. Or Deflation? Switzerland Faces Franc Challenge
The Swiss franc has strengthened due to overall market volatility. Last year, uncertainty led to the franc’s appreciation against the U.S. Dollar, as well as against regional currencies, the euro and the British pound.
This strength poses deflationary pressure on the Swiss economy, which briefly entered a phase of deflation last year, threatening the country’s exports.
In an interview with CNBC on Thursday, SNB President Martin Schlegel said that the bank’s governing board wants to curb the franc’s excessive appreciation to ensure price stability in Switzerland.
“We analyze monetary policy and make decisions about using our instruments, namely interest rates and foreign exchange interventions,” he said.
When asked if the rest of the world understands that the SNB’s motivation for intervening in the foreign exchange market is to stabilize prices, and not to gain a competitive advantage (a weaker currency makes exports more affordable for foreign buyers), Schlegel reiterated that the SNB “intervened in the foreign exchange market solely for monetary policy reasons, and not to create an unfair advantage for Swiss exporters.”
Observe also: CHF/PLN Exchange Rate on March 19, 2026
Donald Trump Will Not Be Pleased. Intervention in “Safe Haven” Looms
With annual inflation in Switzerland at just 0.1%, any cut in interest rates to cool the franc would reinstate unpopular negative interest rates, which were in effect for seven years, until 2022.
Alternatively, policymakers could sell Swiss francs and buy foreign currencies – typically euros, but sometimes dollars.
See also: Exchange Rates. “Black List” of Donald Trump Doesn’t Help. Central Bank in a Tight Spot
However, under the presidency of Donald Trump, the U.S. Has aggressively attacked the SNB’s currency intervention strategy.
Switzerland-U.S. Dispute
Last year, the U.S. Treasury Department added nine economies to a “Monitoring List” of trading partners “whose currency practices and macroeconomic policies warrant enhanced attention.”
The United States imposed a 39% tariff on Switzerland last year, one of the highest levied on any country, which the White House attributed to “currency manipulation and trade barriers.”
Late last year, Switzerland reached an agreement with the U.S. To lower tariffs to 15%. However, even after the Supreme Court invalidated Trump’s tariffs, the country was again subject to a U.S. Investigation.
A Section 301 investigation against 16 trading partners was launched last week. If it finds that Switzerland’s practices are “unreasonable or discriminatory and burden or restrict U.S. Trade,” the United States would be authorized to impose new tariffs or other import restrictions on the country.
Source: CNBC
