Currency Exchange Rate EUR/CHF 2026

SNB peg mechanics (September 2011 - January 2015): SNB committed to defending EUR/CHF minimum of CHF 1.20 — buying unlimited euros and printing unlimited CHF to maintain the floor. By January 2015, SNB had accumulated approximately CHF 490bn in FX reserves (approximately 70% of Swiss GDP). Abandonment trigger: ECB's expected QE (announced January 22, 2015) would have required SNB to accelerate CHF printing to match — risking embedded Swiss inflation and an indefinite open-ended commitment. January 15, 9:30am CET: SNB announced end of floor simultaneously with rate cut to -0.75% (negative). EUR/CHF: 1.20 → approximately 0.85 within 5 minutes. Partial recovery to approximately 0.97-1.00 by end of day. Market casualties: FXCM (US retail FX broker) required emergency $300m bailout; Alpari UK entered insolvency; multiple leveraged CHF traders wiped out; Swissquote suffered heavy losses from client margin shortfalls. Swiss corporate impact: Swatch Group CEO Nick Hayek called it a tsunami for Swiss industry; watch exports to EU immediately became 20-30% more expensive; Swiss Tourism reported catastrophic immediate impact. EUR/CHF never recovered to 1.20 — the structural CHF strength without the SNB artificial ceiling became immediately apparent.

Swiss current account surplus sources: goods exports (approximately CHF 120bn: Novartis pharmaceuticals, Roche diagnostics, Nestle food, ABB industrial equipment, watch exports); services exports (approximately CHF 80bn: banking fees approximately CHF 30bn, insurance reinsurance, tourism receipts, intellectual property); investment income (approximately CHF 40bn from CHF 700bn+ in SNB reserves and Swiss institutional investments abroad). Total approximately CHF 240bn annual surplus on approximately CHF 800bn GDP = approximately 30% of GDP in gross terms. Net approximately CHF 60-80bn surplus annually after imports. This creates persistent structural EUR demand: trading partners buy Swiss exports → need CHF → sell EUR, USD, etc. → buy CHF → CHF appreciated structurally. Interest rate parity prediction: with ECB at 3.5% and SNB at 0.25%, uncovered interest rate parity would predict EUR to strengthen versus CHF (higher EUR rates → capital flows to EUR → EUR appreciates). Reality: CHF has maintained 0.93-0.96 despite 300bp rate differential. The empirical failure of UIP (Uncovered Interest Rate Parity) is precisely because structural current account factors, risk premium, and safe-haven demand systematically override rate differentials — particularly for CHF which has the unique combination of all three structural supports simultaneously.

SNB FX reserve composition: approximately 38% EUR; 35% USD; 10% JPY; 7% GBP; 10% other. Total approximately CHF 700bn at Q3 2025 (down from CHF 1tn peak in 2021 as some positions matured and were partially sold). EUR allocation: approximately CHF 266bn in EUR-denominated assets (bonds, equities). If EUR/CHF rises from 0.94 to 1.10 (approximately 17% EUR appreciation): SNB's EUR position would gain approximately CHF 45bn in CHF-equivalent value. If EUR/CHF falls to 0.85: SNB EUR position loses approximately CHF 24bn. SNB profit/loss impact: SNB generated CHF 80.7bn profit in 2022 (primarily FX gains as USD strengthened); CHF 3.2bn loss in 2023 (EUR weakness); CHF 7.1bn profit H1 2024. SNB profits are distributed to Swiss cantons and Confederation (approximately CHF 6bn annually in good years) — making the SNB's FX reserve performance politically salient. The paradox: if SNB wanted to drive EUR/CHF back to 1.20 (helping Swiss exporters), the CHF 700bn reserve would generate large mark-to-market losses on the existing EUR positions — creating a financial balance sheet disincentive for aggressive EUR buying. This constrains SNB intervention capacity compared to 2011-2015 when reserves were smaller.