Swiss Franc: Soft profile sustained on SNB stance – OCBC

The Swiss Franc (CHF) has weakened toward the year-end EUR/CHF target of 0.94, making it a preferred currency for carry trades according to OCBC’s Sim Moh Siong and Christopher Wong. With domestic inflation subdued and near-term imported inflation risks limited, the Swiss National Bank (SNB) is expected to maintain zero rates throughout the year, contributing to the CHF's continued softness.

Despite mixed growth signals, the CHF has weakened in recent months, approaching the year-end target, and is currently the worst-performing G10 currency against the USD in Q3 2026. While near-term inflation risks remain limited, the recent depreciation of the CHF may eventually lead to an increase in imported inflation, but this impact is expected to be felt in at least two more quarters.

Domestic inflation remains below the SNB's target range of 0-2%. The SNB is projected to keep policy rates at zero for the rest of the year, further supporting the outlook for continued CHF weakness. Growth signals are mixed, with strength in the pharmaceutical sector offset by softer industrial activity and weaker consumer-facing earnings, making a more hawkish policy stance unnecessary.