We see a moderate depreciation of the franc against the EUR next year – Commerzbank

You-Na Park-Heger, an analyst from Commerzbank, is out with a note detailing why the Euro (EUR) could see appreciation against the Swiss Franc (CHF) next year.

CHF: Low inflation

The inflation rate in Switzerland has already been within the SNB’s target corridor (0 to under 2%) for several months. We even assume that interest rates in Switzerland have peaked at the current level of 1.75%, as inflation is likely to remain low.

In the short term, the Swiss franc is likely to remain firm against the EUR. Next year, however, we see moderate upside potential in EUR-CHF.

Contrary to market expectations, the ECB is not likely to cut its key interest rate in mid-2024. The market will therefore have to adjust its expectations.