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BT_LAUBER_Queenie_2024.pdf
Bachelor thesis

The Swiss Franc's safe haven journey : an in-depth analysis of its growing trend and behaviour

  • Genève : Haute école de gestion de Genève

99 p.

Bachelor of Science HES-SO in International Business Management: Haute école de gestion de Genève, 2024

English The Swiss Franc or CHF, Switzerland’s local currency, is known globally as a defensive and safe haven currency in times of economic turmoil. This means that investors tend to seek refuge in the currency to preserve their wealth, which may lead to its potential appreciation against other currencies and assets. However, the various economic and geopolitical events that occurred in recent years may have fuelled uncertainty about the Swiss Franc as a safe haven currency and have led to interventions from the Swiss National Bank (SNB) to maintain price stability and protect the Swiss economy.
We begin our analysis by introducing the concept of safe haven assets and currencies. We also outline the main factors that influence the movements of currencies which will lay the foundation for understanding economic theories behind the movements of safe haven currencies. We then deep dive into the Swiss Franc and its implications on the Swiss economy before introducing the SNB’s mandate and monetary policy tools. As the SNB is one of the only central banks that actively intervenes in the foreign exchange (FX) market to control its domestic currency, we also detail the drivers that have led the SNB to significantly increase its level of foreign currency reserves as well as the potential implications this has had on the performance of Switzerland’s central bank. This report will not extensively focus on monetary policies from the SNB however, it will provide high-level transparency on the latest macroeconomic developments and the implications for the currency. Finally, we will conclude the literature review by bridging the gap between the theoretical foundations of the Swiss Franc against its actual dynamics over the last decades which will then serve as the basis for our analysis.
The continuous appreciating trend of the CHF over the last decades has sparked interest from many researchers who attempted to explain the behaviour of the currency. Thus, the purpose of this study is to achieve an in-depth understanding of the currency by identifying the potential drivers of the currency’s movements based on contemporary data to assess how its safe haven characteristic may influence its behaviour using inferential statistics. Furthermore, this study also aims to identify potential circumstances when the currency appreciated in times of uncertainty, which will also support in clarifying whether the CHF remains a safe haven currency today, through a detailed event study as well as descriptive statistics. The results of our empirical analysis will then be summarized in the conclusion of this research.
Language
  • English
Classification
Economics
Notes
  • Haute école de gestion Genève
  • International Business Management
  • hesso:hegge
Persistent URL
https://sonar.rero.ch/hesso/documents/330900
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