Swiss Franc Emerges as Top Safe Haven During Trump's Tariff Wars

(Bloomberg) — The Swiss franc is cementing its position as the world’s go-to refuge after US President Donald Trump’s latest tariffs broadside drove investors toward the safest assets and dimmed the appeal of the dollar. The Swiss currency led gains among Group-of-10 currencies on Monday as risk aversion took hold after Trump proposed new levies on eight countries that have opposed his plans to acquire Greenland. It advanced 0.7% versus the greenback, hit a two-month high against the euro and traded a whisker off a record against Japan’s yen. The move underscores the franc’s role as investors’ preferred haven bet. Switzerland’s modest debt burden, political neutrality, and predictable policy-making set it apart from the US and Japan, where Trump’s jarring policy moves have hurt the dollar and US Treasuries, while Japan’s ballooning public debt and political flareups weigh on the yen. The franc is “the safe haven of choice at a time like this,” said Kamakshya Trivedi, Goldman Sachs Group Inc.’s chief FX and emerging markets strategist, in an interview with Bloomberg TV. “It’s correlated with gold, it’s exempted a little bit from the current round of tariffs. So I would expect the Swissie to be the primary beneficiary.” Trump’s shock tariff announcements in April last year prompted investors to look beyond the traditional safety of the dollar, burnishing the appeal of the franc. That momentum increased after the weekend with Trump’s new ultimatum on Greenland sending riskier assets like stocks lower globally, while sparking a rally in gold. Trump’s Tariff Threats Hit European Markets From Cars to Credit Among traditional havens, the franc is an investor favorite. Over long periods, the currency has matched or outperformed gold in terms of purchasing power, according to Costa Vayenas, Chief Investment Officer at Genesis Investment Partners AG. And the Swiss currency has gained ground over the dollar, yen, and Swiss franc in the past year. “It outperforms its currency peers due to political stability, an inflation target that finds zero acceptable, its balanced budget requirements that limit the supply of Swiss-franc assets, and the persistent current account surplus,” said Vayenas. Using the MSCI World Index as a proxy for risk, both the franc and yen tend to rally against the dollar on risk-off days, but the franc has consistently outperformed, offering a stronger buffer against volatility. The franc is about four basis points stronger on average on a daily return basis. Switzerland’s debt-to-GDP ratio sits near 40%, according to the latest IMF data, a stark contrast to the US, which is north of 100%, and Japan’s 250%. Franc vs Yen The franc and the yen shared the role of the market’s preferred haven before the pandemic. But since May 2020, the Swiss currency has climbed by more than 80% against the the Japanese currency, a sign of the latter’s growing risks in the eyes of currency traders. Crucially, the currency pair has decoupled from interest-rate differentials since mid-2023, with the Swiss franc climbing versus the yen even as the yield on its 10 year debt falls and Japan’s equivalent rate rises. That divergence might normally lure traders to higher-yielding Japanese assets, but the fact that the franc is strengthening shows how Switzerland’s strong finances are more important to investors than so-called carry-trade returns. To be sure, betting on the franc comes with a caveat: there’s a danger of interventions by the Swiss National Bank, which has a long history of curbing currency strength that could hurt the export-heavy economy. For traders, the threat of sudden central bank selling creates the risk of sharp mark-to-market losses, turning a steady appreciation into a volatile ride. Still, many strategists see interventions as a speed bump rather than a roadblock. “If there was a big risk-off event, we would certainly expect the franc to outperform,” said Alex Cohen, a strategist at Bank of America. What Bloomberg Strategists Say: “While nominally the franc is approaching the highs, Switzerland’s real-effective exchange rate — which adjusts the currency’s value against a basket of partner currencies after adjusting for inflation — isn’t at levels that suggest the franc is overly expensive. That means that the central bank may yet tolerate further gains in the currency.” — Ven Ram, macro strategist. For full analysis, click here. –With assistance from Naomi Tajitsu and Anya Andrianova. (Updates to add comment in ninth paragraph.) ©2026 Bloomberg L.P.