SNB Sold CHF1.4B Francs in Q2 as Iran War Stokes Safe-Haven Demand

The Swiss National Bank continued selling francs in the second quarter, purchasing CHF1.4 billion in foreign exchange from April through June. This marks a sharp drop from CHF3.9 billion bought in Q1, reflecting reduced but persistent safe-haven demand triggered by the Iran conflict. The franc weakened 2.4% since July as the SNB maintained its zero policy rate and signaled readiness to intervene further if needed.

Why the SNB kept intervening in Q2

The SNB bought foreign currency worth CHF1.4 billion from April to June to offset continued haven flows into Switzerland. This was down from CHF3.9 billion in the first quarter but still substantial. The Iran war, which began in March, prompted the SNB to declare heightened readiness to intervene in a rare unsolicited statement. SNB President Martin Schlegel said in April that the bank had unrestricted room to maneuver on both rates and interventions.

The franc stabilized but policy language softened

The Swiss currency held steady at roughly 0.92 francs per euro at both the start and end of Q2. Since July, it has weakened about 2.4% as geopolitical tensions eased. In June, SNB policymakers softened their intervention message, adding that they have increased willingness to act “if necessary.” They also acknowledged looser monetary conditions after the franc had fallen from March peaks. The central bank’s resolve to intervene remains central to its communications strategy.

Switzerland still stuck at zero rates while others tighten

Switzerland remains the only major economy with zero interest rates, even as the Australian central bank, European Central Bank, and US Federal Reserve have begun raising rates in response to inflation. The SNB kept its policy rate at zero on September 24. However, KOF expects a 25-basis-point increase at the next monetary policy assessment in December. Swiss inflation rose to 0.8% in August but remains well below the SNB’s 0 to 2% target range.

Economic growth accelerates, but franc strength poses export risks

Swiss GDP growth was exceptionally strong in Q2 2026, with the SNB now expecting full-year growth of 1.5% to 2%. KOF raised its 2026 forecast to 1.9% from 0.8%, driven by strong pharmaceutical exports and solid private consumption. A stronger franc would make Swiss goods more expensive abroad and weigh on inflation through lower import costs. The SNB views franc weakness as supporting its price-stability mandate. Weak demand in some markets and US tariffs remain headwinds for the export-dependent economy.

Final Thoughts

The SNB’s Q2 franc sales show it will keep managing currency strength to support exports and inflation. With growth accelerating and inflation contained, a December rate hike now looks likely, ending Switzerland’s 15-month zero-rate phase.

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