OCBC said recent equity market volatility has come with more Swiss franc gains. EUR/CHF is now holding well below 0.92. It said continued CHF strength could raise the risk that inflation falls below Swiss National Bank (SNB) forecasts.
It noted that last week’s Swiss CPI was in line with the 0.1% year-on-year forecast for 1Q26. It added that more CHF gains could still push inflation below those forecasts.
Snb Tolerance For A Stronger Franc
OCBC said a long run of franc appreciation could test the SNB’s current tolerance for a stronger currency. It also said the bar for a return to negative interest rates remains high.
The report pointed to recent Riksbank minutes. These minutes said Swedish krona strength is a downside risk to inflation. OCBC said Switzerland could face the same issue. If CHF strength continues, the SNB may shift to a softer policy stance.
Recent equity market swings have pushed the VIX volatility index above 20% over the past month. This has driven safe-haven demand for the Swiss franc. As a result, EUR/CHF has dropped below 0.9200. That is a clear move away from the 0.95–0.97 range seen for much of 2025. This ongoing CHF strength is becoming a key problem for Swiss policymakers.
A strong franc threatens the SNB’s inflation goals. It makes imports cheaper and can pull down local prices. With January 2026 inflation at just 0.1% year over year, the SNB has little room for further downside. This reading is close to the lower end of the SNB’s 0–2% target range. Any extra CHF strength would add to the risk of very low inflation.
March 19 2026 SnB Meeting
We think this makes it more likely the SNB will signal a softer policy stance. That would be similar to how Sweden’s Riksbank has discussed the krona. For derivatives traders, this raises the case for positioning for a rebound in EUR/CHF. If the SNB hints at a shift, EUR/CHF could jump. One way to express this view is to buy EUR/CHF call options that expire after the next SNB meeting.
The key event is the SNB policy assessment on March 19, 2026. Any verbal intervention or more dovish comments ahead of the meeting could weaken the franc. Traders should also watch option volatility. If it rises, it may show the market is pricing in a higher chance of a policy change.
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