We seem to be back at parity between CHF and EURO.
Wise sages of this forum, what evolution do you see in the future? Will the Euro recover, is this the right value until circumstances change? Or will the Franc keep increasing slowly but steadily (my bet for now)?
Franc to continue strengthening vs Euro by 2-2.5% per year. Same trend as for the past 50 years
Based on current forward rates, the market expectation is for CHF to strengthen against EUR but only by 0.3% within a year, 1% in two years. If the ECB increases the rates more than SNB (as it should, given the inflation), the forward rates will increase as well.
My personal hunch is that the franc may get as high as 1.10 euros this year before returning to parity, where I predict it will remain over the longer term. But that is just a hunch.
Isn’t one of the “core tenets” of index investing and by extension the “FIRE movement’s” that we can’t possibly hope to successfully time or predict the market? Yet there are multiple posts trying to do this exact thing at regular interval on this forum.
OP: no one owns a functional crystal ball. Ask 10 people and you’ll get 10 different answers.
In the short term it is impossible to predict. But in the long term, the difference in interest rates has been a reliable indicator of the trend of most currency pairs, as the long term real risk free return is currency independent.
But even knowing this is rather useless for an investor, because it’s not possible to hedge against long term trends.
Not sure the Nationalbank would let the Franc get stronger without limits, that would hurt the Swiss export sector badly.
Couldn’t agree more. However, being interested in macro, it’s intellectually stimulating to debate about the future. Nothing wrong with that imho.
As long as inflation is higher in the Eurozone than in Switzerland, I don’t think it will be a problem to let the Swiss franc strengthen for the national bank, because wages in Euro will also keep increasing in proportion. The 1.20 floor is a thing of the past now.
There is definitely a limit on the speed at which it strengthens, but there is no nominal limit.