Swiss Franc Currency – The Swissy in Forex
The Swiss franc (CHF) is considered to be a major currency in the Forex market and the premier safe-haven currency.
Switzerland is the world’s thirty-sixth largest economy.
Trade Surplus or a Trade Deficit?
Switzerland runs a trade surplus of $49.35 billion, giving the country a ranking of 7 out of the 190 countries tracked by the CIA in The World Factbook.
What Does Your Economy Export?
Switzerland exports machinery, chemicals, metals, watches, and agricultural products.
According to the World Trade Organization (WTO), 25 Switzerland exports $172.9 billion in goods and merchandise corn-pa red to only $68.8 billion in commercial services. The WTO breaks down those exports as follows:
Goods and Merchandise
- Agricultural products: 4.2 percent
- Fuels and mining products: 5.6 percent
- Manufactures: 89.4 percent
- Transportation: 8.2 percent
- Travel: 20.3 percent
- Other commercial services: 71.5 percent
To Whom Does Your Economy Export?
The W’TO ranks the following countries as the top destinations for exports from Switzerland:
- European Union: 59.7 percent
- United States: 10.0 percent
- Japan: 3.8 percent
- China: 2.9 percent
- Hong Kong: 2.9 percent
What Does Your Economy Import?
Switzerland imports machinery, chemicals, vehicles, metals, agricultural products, and textiles.
According to the WTO, the country imports $155.7 billion in goods and merchandise compared to only $35.5 billion in commercial services. The WTO breaks down those imports as follows:
Goods and Merchandise
- Agricultural products: 7.3 percent
- Fuels and mining products: 11.4 percent
- Manufactures: 80.6 percent
- Transportation: 20.6 percent
- Travel: 30.7 percent
- Other commercial services: 48.7 percent
From Whom Does Your Economy Import?
The WTO ranks the following countries as the top sources imports to Switzerland:
- European Union: 78.0 percent
- United States: 5.8 percent
- China: 3.0 percent
- Japan: 2.1 percent
- Vietnam: 1.3 percent
Do You Have an Attractive Government Debt Market?
Switzerland currently has a Moody’s rating of Aaa. This is the only rating that the country has had in the past 30 years. This is a positive sign for the country’s government debt market.
Do You Have an Attractive Equities Market?
Switzerland has an attractive equities market. It is the twelfth largest equities market in the world, with a total \market value of $1.071 trillion.
Central Bank Mandate
The Swiss National Bank’s (SNB) monetary policy strategy consists of three elements. First, the SNB states how it defines price stability. Second, it bases its monetary policy decisions on a medium-term inflation forecast. Third, it sets an operational target range for its chosen reference interest rate, the three-month 1,1 BOR.
The SNB has foreign currency reserves of $217,227 million and gold deposits of $47,161 million.
Government Intervention in Forex
The Swiss government has been known to intervene in the currency market from time to time.
Important Economic Announcements
When you are watching the economic announcements coming out of Switzerland, make sure that you keep your eye on the following:
- Interest rates
- Retail sales
- KOF Economic Barometer
- Gross domestic product (GDP)
- Trade balance
Are You a Safe-Haven Currency?
Yes, the Swiss franc is considered to be a safe-haven currency. An extremely stable economy and the fact that a comparatively large amount of Swiss francs are backed by gold make the Swiss franc an attractive investment during times of market unease and volatility.
How Can I Trade You?
You can trade the Swiss franc using any of the following:
- Spot Forex
- Forex futures
- Exchange-traded funds (ETFs)
- Exchange-traded notes (ETNs)
- Spot Forex options
- Exchange-traded Forex options