Exchange Rate Between Swiss Franc And Us Dollar
Introduction
The exchange rate between the Swiss Franc (CHF) and the US Dollar (USD) is a significant economic indicator that affects trade, tourism, and investment between Switzerland and the United States. This article will explore the factors that influence the exchange rate between CHF and USD, the history of their exchange rate, and the current trends in their exchange rate.
Factors Affecting the Exchange Rate
The exchange rate between CHF and USD is influenced by various economic, political, and social factors. One of the major factors is the interest rate set by the Swiss National Bank (SNB) and the US Federal Reserve (Fed). When the SNB raises its interest rates, investors tend to invest more in Swiss securities, which increases the demand for CHF and its exchange rate. Conversely, when the Fed raises its interest rates, investors tend to invest more in US securities, which increases the demand for USD and its exchange rate.
Another factor that affects the exchange rate is the balance of trade between Switzerland and the United States. When Switzerland exports more goods and services to the United States than it imports, it tends to earn more USD, which increases the supply of CHF in the market and lowers its exchange rate. Conversely, when the United States exports more goods and services to Switzerland than it imports, it tends to earn more CHF, which increases the supply of USD in the market and lowers its exchange rate.
The political and social stability of Switzerland and the United States also affects their exchange rate. When there is political or social instability in Switzerland or the United States, investors tend to avoid investing in their securities, which lowers the demand for CHF or USD and their exchange rate.
History of the Exchange Rate
The exchange rate between CHF and USD has a long and volatile history. In the 1970s, the exchange rate was fixed at CHF 4.30 per USD. However, in the 1980s, the exchange rate started to fluctuate due to the rise of inflation and the global oil crisis. In the 1990s, the exchange rate reached its peak at CHF 1.20 per USD. However, in the 2000s, the exchange rate started to decline due to the global financial crisis and the European debt crisis. In 2011, the SNB fixed the exchange rate at CHF 1.20 per USD to prevent the appreciation of CHF, which was affecting Switzerland's exports and tourism industry.
Current Trends in the Exchange Rate
The current exchange rate between CHF and USD is influenced by the COVID-19 pandemic and the global economic slowdown. In March 2020, the SNB and the Fed reduced their interest rates to near-zero to stimulate their economies. This led to a decline in the exchange rate between CHF and USD. However, in the second half of 2020, the exchange rate started to increase due to the global economic recovery and the rise of inflation. As of August 2021, the exchange rate is approximately CHF 0.91 per USD.
Conclusion
The exchange rate between CHF and USD is a vital economic indicator that affects trade, tourism, and investment between Switzerland and the United States. The exchange rate is influenced by various economic, political, and social factors, and its history is long and volatile. The current trend in the exchange rate is affected by the COVID-19 pandemic and the global economic slowdown. The exchange rate between CHF and USD will continue to fluctuate in the future, and it is essential to monitor its trends for effective investment and trading decisions.