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Forecast: How will the swiss franc to euro exchange rate evolve in 2024?

Clock icon8 minutes|Published on 31.05.2024|Updated on 05.06.2024

Since the beginning of 2024, the exchange rate between the Swiss Franc (CHF) and the Euro (EUR) has shown numerous fluctuations, ranging from 1.07 to 1.01 within five months. Some experts even predict a return to parity after the summer. The Swiss Franc, known for its stability, has lost over 10% of its value against the US Dollar, 8% against the British Pound, and 6.7% against the Euro.

For cross-border workers, these fluctuations can affect the repatriation of their salaries and their purchasing power. International companies must also deal with this volatility to protect their margins.

In this article, using the latest data from the Swiss National Bank (SNB) and the European Central Bank (ECB), as well as expert opinions, we analyze the economic context, forecasts, and various factors influencing the CHF/EUR exchange rate to provide you with tips and optimization strategies.

Economic analysis and exchange factors

Current context

Recent economic performances

Switzerland: During 2023, Switzerland maintained a stable economy despite numerous geopolitical events. GDP growth, although modest, remained stable, supported by strong domestic demand and low inflation. The Swiss National Bank (SNB) continued its prudent monetary policy, adjusting interest rates to control inflation and stabilize the Swiss Franc. The labor market also performed well, with a low unemployment rate around 2.1%, and moderate wage increases.

Source: Swiss National Bank - Annual report 2023

Eurozone: The Eurozone experienced economic slowdown in 2023. GDP growth dropped from 3.4% in 2022 to 0.4% in 2023, mainly due to the repercussions of the war in Ukraine and rising interest rates. Inflation, according to ECB forecasts, although decreasing, remained high at 5.4% in 2023 before falling to 2.7% in the first half of 2024. This situation affected the construction and manufacturing sectors, but the labor market showed resilience with a stable unemployment rate at 6.5%.

Source: European Central Bank - Economic bulletin 2023

Influencing economic factors

Inflation

Inflation is a key factor influencing exchange rates. In Switzerland, inflation remained moderate at around 1.4% in April, thanks to the SNB's prudent monetary policy. Conversely, the Eurozone experienced higher inflation, mainly due to rising energy and food prices. This inflation difference can lead to variations in the CHF/EUR exchange rate.

Interest rates

In 2023, both the SNB and the ECB raised their interest rates to combat inflation. The ECB increased its rates by 200 basis points, bringing the deposit rate to 4%. These adjustments directly influence the cost of borrowing and investment, impacting the demand for respective currencies.

Monetary policies

Divergent monetary policies between Switzerland and the Eurozone also contribute to the fluctuation of the CHF/EUR exchange rate. The SNB has opted for a conservative approach, ensuring the stability of the Swiss Franc. Meanwhile, the ECB has intensified its efforts to control inflation, causing more pronounced variations in the Euro.

By understanding these economic dynamics and following the decisions of the SNB and the ECB, you can anticipate the evolution of the CHF/EUR exchange rate in 2024.

Sources: Swiss National Bank - Annual report 2023, European Central Bank - Economic bulletin 2023

Evolution and trends

CHF/EUR evolution

The chart above illustrates the evolution of the CHF/EUR exchange rate over the past few years. The data shows periods of relative stability followed by marked variations during major economic events.

  • 2018-2019: The exchange rate was relatively stable, hovering around 0.88 CHF/EUR. This period was characterized by low inflation and accommodative monetary policies in Europe.
  • 2020: The COVID-19 pandemic caused increased volatility. The exchange rate dropped to around 0.95 CHF/EUR at the beginning of the pandemic due to increased demand for the Swiss Franc, perceived as a safe haven.
  • 2021-2022: The exchange rate continued to fluctuate between 0.90 and 1.05 CHF/EUR, influenced by economic stimulus policies and interest rate changes.
  • 2023: New volatility was observed, with the exchange rate oscillating around 1.02 CHF/EUR, influenced by geopolitical uncertainties and interest rate adjustments by the SNB and the ECB. 2023 also saw a record high of 1.0763 CHF/EUR on December 25, 2023.

Key trends

  • Safety Seeking: The Swiss Franc is often perceived as a safe haven during global economic uncertainty, leading to currency appreciation.
  • Monetary Policies: Adjustments in interest rates by the SNB and the ECB play a crucial role in CHF/EUR exchange rate variations.
  • Inflation: Differences in inflation between Switzerland and the Eurozone also influence the exchange rate, with higher inflation in the Eurozone tending to weaken the Euro against the Swiss Franc.

Sources: Swiss National Bank - Exchange rate evolution, European Central Bank - Exchange Rate Statistics

2024 forecasts

For cross-border workers, individuals, and businesses, forecasting and anticipating the CHF/EUR exchange rate in 2024 is crucial for optimizing money transfers and financial strategies. Based on current data, here are two scenarios.

Optimistic scenario

  • Context: Strong economic recovery in Europe, with resolution of geopolitical uncertainties.
  • Exchange rate: According to forecasts by Pictet Wealth Management, the EUR/CHF exchange rate could stabilize around 1.05. This projection is supported by a decrease in inflation in the Eurozone and moderate economic growth.
  • Justification: Improved global economic conditions, a stronger Euro due to accommodative ECB monetary policies, and political stability in Europe.

Pessimistic scenario

  • Context: Prolonged geopolitical uncertainties, economic stagnation in the Eurozone, and continued inflationary pressures.
  • Exchange rate: In a pessimistic scenario, the exchange rate could fall to 0.95 CHF/EUR. The Swiss Franc could strengthen as a safe haven, according to analyses by Pictet Wealth Management.
  • Justification: Increased SNB interest rates to combat inflation, persistent economic slowdown in Europe, and rising energy and food prices.

Statements and analyses from financial zxperts

  • Christine Lagarde, President of the ECB, stated that the Eurozone's economic recovery is on track, but the EU must remain vigilant against inflationary pressures and geopolitical uncertainties. Source: ECB
  • Thomas Jordan, President of the SNB, recently stated that the inflation forecast presents a "small upside risk". He also mentioned that if this risk materializes, monetary policy would need to be more accommodative than anticipated. Source: SNB

Quarterly forecasts

3rd quarter 2024

  • Forecast: 1.02 CHF/EUR
  • Possible reasons: Slight resurgence of inflationary pressures, requiring further ECB interventions.

4th quarter 2024

  • Forecast: 1.05 CHF/EUR
  • Possible reasons: Economic and monetary stabilization, with a balance achieved between SNB and ECB monetary policies.

Sources: Swiss National Bank - Annual report 2023, European Central Bank - Economic bulletin 2023, Reuters - Economic Forecasts, Bloomberg - Financial Analyses, Exchange Rates, Pictet Wealth Management

Influencing factors

Impact of decisions by the SNB and the ECB

The monetary policy decisions made by the Swiss National Bank (SNB) and the European Central Bank (ECB) will continue to significantly impact the CHF/EUR exchange rate during 2024. The SNB has maintained a policy of monetary stability, adjusting interest rates to control inflation and stabilize the Swiss Franc. The ECB, on the other hand, has raised its rates to combat high inflation in the Eurozone. These rate adjustments directly influence borrowing and investment costs, thereby impacting the demand for CHF/EUR exchanges.

Sources:

Geopolitical events and their influence on currency markets

Geopolitical events, such as the war in Ukraine, trade tensions between major powers, and political uncertainties in Europe, can cause significant fluctuations in the exchange rate. For instance, during times of uncertainty, the Swiss Franc is often seen as a safe haven, leading to an appreciation of the currency. International negotiations and agreements can also influence investor expectations and thus the currency market.

Sources:

Influence of fiscal and budgetary policies

The fiscal and budgetary policies adopted by the governments of Switzerland and Eurozone countries will also play a decisive role. Expansionary policies, such as increased public spending or tax cuts, can stimulate the economy but also lead to higher inflation. Conversely, austerity measures can slow economic growth but help stabilize the currency. The budgetary measures taken in response to the pandemic and the energy crisis will have lasting repercussions on exchange rates.

Sources:

Impact and tips

Risk management

For cross-border workers and businesses, proactive risk management is essential to minimize the negative impacts of CHF/EUR exchange rate fluctuations.

  • Use of Forward Contracts: Cross-border workers and businesses can use forward contracts to lock in an exchange rate for a future transaction. This helps reduce uncertainty related to exchange rate fluctuations and ensure profit margins.
  • Hedging with Options: Currency options provide protection against exchange rate variations by giving the right, but not the obligation, to buy or sell a currency at a predetermined rate. This strategy allows risk management while retaining some flexibility.
  • Diversification of Income and Expenses: Businesses can diversify their sources of income and expenses in different currencies to reduce exposure to a single currency. This includes negotiating contracts in both CHF and EUR, and using multi-currency accounts to manage international cash flows.

Sources:

Optimizing transfers

  • Market Monitoring and Transfer Timing: To improve money transfers, it is crucial to monitor market trends and choose opportune moments to carry out transactions. Using exchange rate tracking tools and alerts can help identify the best times to transfer money.
  • Using a Currency Converter: Currency exchange platforms like ibani offer more competitive exchange rates and lower fees than traditional banks. Compare services and choose those offering the best rates and fees to generate significant savings.
  • Planning and Budgeting: For businesses, planning currency needs in advance and incorporating exchange rate forecasts into the budget can help avoid surprises and better manage costs. Individuals can also benefit from this approach for regular transfers, such as loan payments or remittances to family.

Sources:

Conclusion

Key takeaways

In 2024, the exchange rates between the Swiss Franc (CHF) and the Euro (EUR) will, as usual, be influenced by several economic and political factors. The decisions of the Swiss National Bank (SNB) and the European Central Bank (ECB), geopolitical events, and fiscal and budgetary policies remain the determining factors. For cross-border workers and businesses, understanding these dynamics is essential to best anticipate money transfers and manage exchange rate risks. Although estimates and forecasts are never perfectly accurate, using appropriate financial tools and platforms like ibani, which offer the real market exchange rate, allows significant savings on exchange fees.

Our recommendations

  • Monitor SNB and ECB decisions: Keep an eye on monetary policy announcements and adjust your strategies accordingly.
  • Use risk management tools: Consider forward contracts or currency options to secure your transactions.
  • Choose the right time for transfers: Use rate tracking tools and alerts to optimize the timing of your money transfers.
  • Use online exchange platforms like ibani: Benefit from market exchange rates and minimal margins to maximize exchanged amounts.

What next?

  • Subscribe to our newsletter: Stay informed about all our latest updates.
  • Consult a financial expert: Get personalized advice to manage your exchange rate risks and improve your transactions.
  • Use ibani for your transfers: Simplify your money transfers with competitive rates and transparent fees.

FAQ

Cross-border workers regularly transfer their salaries between Switzerland and Eurozone countries. A favorable exchange rate can increase their purchasing power in euros.


Businesses can use forward contracts and currency options to lock in rates in advance, diversify their sources of income and expenses in different currencies, and use currency converters like ibani to manage conversions between their international accounts.


ibani offers low exchange rates and reduced fees, allowing you to maximize the amounts converted during currency exchanges. Additionally, the platform is easy to use and provides complete transparency on margins.


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