CHF or the Swiss Franc is one of the popular currencies in the financial world and it is a safe haven. In difficult times, investors can choose CHF to park their money as it can retain its value. In 2007-2008, nervous investors flocked to buy CHF due to the financial crisis. 

During the European debt, the performance of the CHF is steady. That made it become popular and traded in the best forex broker. In this post, we will dig deeper and understand why Swiss France is too strong.

The European Debt Crisis

The European debt crisis roiled in 2011. The international and EU investors seeking safety bought the Swiss franc. The country’s export was starting to be hurt by the stronger Swiss francs.

At the time, the currency was artificially capped at 1.20 against the euro. The policymakers decided to take the policy to prevent the currency value becoming stronger. The Swiss central bank bought euros and printed more francs to maintain this limit. In January 2015, there was an unexpected move. 

The Swiss National Bank replaced the artificial cap and changed it a little more than three years earlier. The move took the forex market by surprise and sent the conservative and stable currency soaring, the value of the franc.

Many brokers and traders suffered heavy losses in the ensuing chaos. Apart from that, investors still think that the Swiss franc, which is backed by a strong competitive economy financial system is a safe haven.

Why Does the Country Not Use the Euro?

Thinking that all European country are the member of the EU (European Union) is a common misconception. Many people also think that the euro is used by those countries. But, when it comes to Switzerland that is not the case. 

Despite having borders with EU members like France and Germany, the country is not a member of the EU at all. In 1992, the Swiss people choose not to join the EAA (the European Economic Area) 50.3% to 49.7%. 

Between 1992 and 2002, there was a series of bilateral agreements between the country’s government and the union. It allows people to remain interdependent while moving freely. The union is Switzerland’s main trading partner. 

The euro is not used by Switzerland as its national currency. Since the only national and official currency of the country is the franc, the euro is foreign money. The Swiss franc still can be used in the country. But there will be a change in the Swiss franc exchange rate when the transaction is executed.

A Final Thought

There are several important things that need to be remembered by those who want to invest in Swiss francs. Like stock markets, the foreign exchange markets are prone to downs and ups that can negatively impact your position.

While the currency is commonly stable above all else, the country’s national bank’s policy can affect it. Recently, the bank decided to suddenly devalue the franc from the euro. 

The currency value is soaring and unstable. This is a reminder that macroeconomics is not the only factor that affected the currency movement but also, the central bank policy and action.

When it comes to currency trading, traders have to deal with many risks and uncertainties. But it will be easier and pleasing by choosing the right partner like Didimax forex broker.

We are a licensed broker you can trust. You can trade with your desirable instruments and get many benefits from us. The risks will always be there. But the currency is resting on the healthy Swiss financial and economic stem. The Swiss franc will continue as among the safer investment options.