Frank must become stronger: Five advantages of a low euro for us Switzerland

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The single currency has never been this weak since the euro was created. These days the price of one euro varies between 94 and 95 cents. Or vice versa: At the latest record high, 1 franc cost 1.06 euros. 15 years ago 1 franc was worth only 60 euro cents.

Experts predict that the euro will fall further. This is bad news for Swiss exporters: Their products have become 12 percent more expensive on the European market in the last two years, making them less competitive. But the weak euro also has its upsides for Swiss people: Those who earn income in francs benefit from cheaper prices in the 20 countries in the euro zone.

This is particularly useful given the increase in prices: Those who buy in euros can compensate for some of the loss of purchasing power. Inflation in Switzerland reached its highest level ever, reaching over 3 percent in the first quarter of 2023. This means that the price of a Swiss household’s shopping cart has increased by an average of 3 percent.

At the same time, the franc gained 4 percent in value compared to the euro. Anyone who purchases goods and services in euros rather than francs can compensate for the loss of purchasing power. Here and there the low euro exchange rate even allows for real bargains.

One night in a four-star hotel in Rome costs 350 euros. Five years ago you would have had to exchange 400 Swiss francs to pay for your night’s accommodation. Today you still need 330 francs for this.

The same applies to car rental in France, for example: a rental car costs 250 euros per week. This figure, which was 285 francs five years ago, is 236 francs today.

The strength of the franc also comes into play when shopping online in euros. For example, when shopping on Amazon.de. Anyone ordering items in euros can choose to pay in euros or francs. When paying in Swiss francs, the current exchange rate applies and you automatically benefit from the lower value of the euro. Swiss people benefit from shopping tourism as well; By simply shopping online you save on the journey to Konstanz (D) or Lörrach (D).

Anyone who works in Switzerland but lives in a country close to the border will have more money in their wallet at the end of the month due to the favorable exchange rate. A simple calculation example: 1000 Swiss francs was 940 euros two years ago, while ten years ago it was only 650 euros. Today, cross-border travelers receive 1,060 euros for 1,000 Swiss francs. Thus, the purchasing power of cross-border travelers increased. This is true even if you deduct inflation in the Eurozone. Currently it is 4.3 percent.

Anyone who owns property in the Eurozone, such as a holiday home in France, can also benefit. Monthly mortgage payments for the house become cheaper thanks to the exchange rate. Concrete example: The monthly fee is 1500 Euros. When we abolished the mortgage two years ago, 1 euro was still worth 1.10 francs. Mortgage cost – converted – 1,650 francs per month. To date, the monthly rate has been reduced to 1,410 francs.

It will be cheaper to move your Swiss retirement to a sunny Eurozone country like Portugal. Especially if the current weakness of the euro against the franc continues in the long term. Anyone migrating at retirement age will continue to receive both the AHV and pillars 2 and 3, paid in Swiss francs. At the current exchange rate, the euro-denominated pension suddenly becomes more valuable, thus ensuring a higher standard of living.

Source :Blick