The tensions between Russia and Ukraine may be having an unexpected effect. The currency of the Swiss Confederation is strengthening to levels last seen in June 2015, as investors look for a safe haven to “park” their money.
The Swiss franc strengthened 0.2 percent to 1.0325 per euro on Monday. It was last this high against the single European currency at the end of June 2015, its strongest in almost seven years.
Experts say the rising tensions between Russia and Ukraine are to blame for the influx of foreign assets. This is because investors are looking for a safe haven for their money, fearing the outbreak of war. And the Swiss franc has proven itself in this respect several times in the past.
“I completely understand that some investors are becoming increasingly nervous about developments in Ukraine, which is feeding through into a strengthening Swiss franc,” Karsten Junius, chief economist at Swiss bank J. Safra Sarasin Group.
Data charting trading in the foreign exchange market shows that the Swiss National Bank has not yet intervened against the strengthening franc. But it did a few years ago when the Swiss franc strengthened to a level that would have damaged the Alpine country’s economy.