US Dollar / Swiss Franc - USD/CHF

Less dealt with in the Foreign exchange market (Forex) than in the EUR/CHF cross (Euro/Swiss Franc), the USD/CHF cross (American Dollar / Swiss Franc) is still very popular.

If, in theory, this cross is a compounding that implies the Euro (USD/CHF = EUR/CHF: EUR/USD); this equation is not always respected, in particular in case of an economic crisis or a worldwide financial instability.

Structurally, the Swiss Franc tends to depreciate against Dollar when the world situation grows, and to increase in value when there is a growth of risk in the market, that is to say- in case of instability.

That way, the Swiss Franc would play its role of reserve value (banking secrecy, National Bank of Swiss’ important gold reserves) as an investment that wouldn’t suffer the same hazards as the market.

But the American Dollar also has a role of reserve value in case of turbulences, that’s why this criterion is not only decisive of the recent USD/CHF cross rates evolution.

From 2001 to 2005, after the explosion of the «internet bubble”, the Swiss Franc clearly apprised against the Dollar: USD/CHF = 1.80 in July 2001, USD/CHF = 1.15 in July 2005 (that represents a 36% increase in value of the CHF in three and a half years

On the other hand, the Swiss Franc clearly depreciated against the Dollar from January 2005 to March 2006 (USD/CHF = 1.31), as the most important “carry trade” operations done by investors ‘(sales of Swiss Francs with low interest rates, then invest in Dollars with interest rates defined quite high by the Fed during all this period) accelerated this depreciation.

In case of financial instability (the subprime crisis), the Swiss Franc continued to regain value until April 2008, reaching the parity 1USD = 1 CHF. A small adjustment, with small jolts, has been observed in favor of the Dollar since April 2008 (USD/CHF = 1.19 in November 2008, ISD/CHF = 1.14 in April 2009).