🏔️ The Last Currency Standing

The Swiss franc is up 3.5% against the dollar since January. Up 3% against the euro. One dollar now buys you CHF0.76, which is the lowest it’s been in fifteen years. The euro is sitting at CHF0.91, a level we’ve literally only seen once before, back in 2015, when the Swiss National Bank dropped the floor and the euro briefly went into cardiac arrest.

These are not normal moves for a currency whose entire monetary surface is, let’s be honest, tiny compared to the dollar or the euro. Switzerland is a country of 9M people. It shouldn’t be absorbing global capital flows like some kind of financial black hole. And yet. Here we are. Because when the White House spends its mornings threatening to annex Greenland, kidnapping heads of state, and picking fights with Canada (Canada!), money needs somewhere to go. It used to have options. The dollar was reliable. The yuan was, briefly, fashionable. Now? The franc is the last one standing. Not because Switzerland did anything spectacular. Because everyone else got weird.

Here’s the fun part. The SNB’s policy rate is at zero. Inflation is at 0.1% annually. Zero-point-one. The eurozone is running at 1.7%, which central bankers there would describe as « progress » with a straight face. So you’ve got a currency that’s appreciating AND has virtually no inflation AND lets you borrow at basically nothing. This is the kind of setup that makes hedge fund managers call their therapists. (The good kind of call.) The problem, of course, is that if capital keeps flooding in at this pace, Martin Schlegel, who is 49 and already acts like he’s 70 in the best possible way, might have to push rates negative again. Switzerland did that from 2015 to 2022. Nobody loved it. Savers hated it. Banks hated it. But it worked, in the boring, unglamorous way that Swiss policy tends to work: quietly, without a press tour.

The real bind is political. Washington slapped 39% tariffs on Switzerland, the highest for any European country, then graciously « reduced » them to 15%. And since June 2025, Switzerland sits on the US Treasury’s currency manipulation watchlist, which is one of those American inventions that sounds serious but mostly exists so politicians can threaten countries that run trade surpluses. If the SNB starts buying foreign currencies to weaken the franc (which it has done before: CHF86B in 2015, CHF117B in 2020), it hands Trump a talking point. So Schlegel is stuck: his currency is too strong, his tools are politically radioactive, and his preferred strategy of saying absolutely nothing is running into the limits of market gravity. Most analysts think the SNB intervenes when the euro hits CHF0.90. We’re at 0.91. The Swiss franc doesn’t have a PR team. It doesn’t need one.

Have a great week!

M. Hantale 🧀

Here’s what everyone gets wrong about Swiss trade: it’s not about watches. Not anymore. January’s export data dropped last week and the headlines all led with the same tired angle, watchmakers in trouble, luxury slumping, tariff damage. Which is true. Swiss watch exports fell 3.6% to CHF1.9B. Exports to the US cratered 16%. Precious metal timepieces lost 14% in value. The luxury segment, anything above CHF3,000 export price, sank 8.1%. Grim numbers. But they describe roughly 8% of Swiss exports. Meanwhile, the other half of the story sat right there in the same release: pharma exports climbed 4.9% to CHF11.52B. That is not a rounding error. That is a country whose economic center of gravity has shifted so dramatically over the past two decades that the old stereotypes are not just outdated, they’re misleading.

CHF11.52B. In a single month. From one sector. To put that in proportion: the entire Swiss watch industry shipped CHF25.5B in all of 2025. Pharma did almost half that in January alone. The chemical and pharmaceutical sector now accounts for 52% of total Swiss goods exports, up from roughly 30% at the turn of the century. In 2024, it hit a record CHF149B and drove 72% of all Swiss export growth accumulated over the past quarter century. One industry, three quarters of the growth. The rest, including watches, machines, precision instruments, is furniture on a stage built by Roche and Novartis.

The tariff story makes this concentration look dangerous. And it should. The US slapped Switzerland with a 39% duty in August, cut it to 15% in November, and Washington has set a March 31 deadline for a binding deal. January’s numbers show the damage isn’t over: total Swiss exports to the US dropped 7.1% to CHF3.18B, down from CHF4.23B a year earlier. The trade surplus with America narrowed from CHF2.99B to CHF1.76B. That’s a CHF1.2B haircut in twelve months. The watch crowd got the worst of it. December had looked promising, US-bound watch shipments bouncing 19.2% after months of carnage that saw a 56% collapse in September. January killed that optimism. Down 14% again. Turns out brands had simply front-loaded inventory to beat the tariff cliff, then redirected supply to other markets once the panic subsided. Not a recovery. A logistics hangover.

But here is where the Swiss story diverges from every other small open economy getting pushed around by American trade policy. Pharma gives Switzerland something no tariff schedule can easily neutralize: structural leverage. Generic pharmaceuticals were explicitly exempted from US reciprocal tariffs under the December framework agreement. Branded drugs face threats, sure, but Roche and Novartis are already expanding US manufacturing capacity, playing the same game every multinational plays when Washington starts flexing. CHF54.7B. That’s what Switzerland exported to the US in 2025, up 3.9% despite the tariff war, because Swiss firms front-loaded shipments all year. And buried in the noise about trade deficits is a number Trump’s team never mentions: the US ran a $29.7B services surplus with Switzerland in 2024. Factor that in and the so-called imbalance that justified 39% tariffs shrinks to almost nothing. Switzerland, for its part, unilaterally eliminated tariffs on all industrial goods in January 2024. Over 99% of American products enter the country duty-free. It’s not Switzerland that has the trade barrier problem.

The real risk is not that tariffs destroy Swiss exports. It’s that pharma concentration becomes a single point of failure. Six percent of GDP. A quarter of all industrial value added. If Roche or Novartis ever substantially relocated production to satisfy US localization demands, the impact on Basel, and on Switzerland, would be seismic. KOF, the ETH economic institute, has said quietly that stagnation in pharma growth is no longer a pessimistic scenario but a plausible one. That’s worth watching more closely than any monthly watch export figure. But for now, the concentration works. The mid-range watch segment, CHF500 to CHF3,000, posted gains of 17.7% in value. China showed tentative signs of life at +5%. Machine exports ticked up 4.3% even as machine tools slipped 2.6%. The economy is not broken. It’s lopsided. And in a world where the US is weaponizing trade policy against everyone from Bern to Brussels, being lopsided toward the one sector that makes your biggest adversary’s population healthier is not the worst hand to hold. Pharma is Switzerland’s put option. It doesn’t make the country immune. But it makes the cost of punishment asymmetric. And in trade wars, asymmetry is the only real edge.