The Swiss National Bank (SNB) signaled on Thursday an increased willingness to intervene in currency markets, a move complicated by ongoing trade tensions with the United States. The announcement came as the Swiss franc, traditionally considered a safe haven asset, continues to appreciate in value amid global uncertainty, including the conflict in the Middle East.
SNB Chairman Martin Schlegel told CNBC that the governing board intends to curb excessive appreciation of the franc to maintain price stability within Switzerland. “We are analyzing monetary policy and making decisions about the use of our instruments, namely interest rates and foreign exchange interventions,” he said.
The SNB’s statement reflects a delicate balancing act. A strong franc can exert deflationary pressure on the Swiss economy, threatening exports. In 2023, Switzerland briefly experienced a period of deflation. However, direct intervention to weaken the franc risks further antagonizing the administration of U.S. President Donald Trump, which has repeatedly accused Switzerland of unfair currency practices.
The U.S. Treasury Department last year added Switzerland to its “Monitoring List” of trading partners with potentially problematic currency policies. Subsequently, the U.S. Imposed a 39% tariff on Swiss goods, one of the highest levied on any country, citing “currency manipulation and trade barriers.” Even as a deal was reached to lower the tariff to 15%, Switzerland remains under investigation by the U.S. Government.
A Section 301 investigation, initiated last week and encompassing 16 trading partners, could lead to further tariffs or import restrictions if the U.S. Determines that Swiss practices are “unreasonable or discriminatory and burden or restrict U.S. Commerce.”
In the second quarter of 2025, the SNB purchased 5.06 billion Swiss francs (equivalent to $6.36 billion) in foreign currencies, marking its largest quarterly intervention in three years, according to data released Tuesday. This intervention followed the announcement of recent tariffs on U.S. Imports by President Trump, which triggered increased volatility in global financial markets and a surge in demand for the franc as a safe haven.
The SNB has two primary options for intervention: lowering interest rates, which could reinstate the negative interest rates that were in place until 2022, or selling Swiss francs and purchasing foreign currencies, typically euros, and sometimes U.S. Dollars. Schlegel reiterated that the SNB’s interventions are solely motivated by monetary policy considerations, not an attempt to gain a competitive advantage for Swiss exporters.
The SNB’s current annual inflation rate stands at just 0.1%, making any interest rate cuts potentially problematic. The U.S. Investigation into Swiss trade practices remains ongoing.
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