Shopping tourism, holidays abroad and mortgages: What you need to know about the franc’s annual low

class = “sc-cffd1e67-0 iQNQmc”>

Switzerland is known for its stable currency. However, yesterday, Tuesday, the Swiss franc fell to its lowest value of the year. One US dollar still costs around 88.1 centimeters. The price of the euro against the franc increased from 94.3 centimeters to 94.7 centimeters previously. The franc has recovered slightly since then.

The reason for the collapse was the latest inflation data. The inflation rate, which was 1.3 percent in January, was well below expectations. So what exactly does the latest devaluation of the franc mean? Blick answers the most important questions:

No, the franc remains strong. “If you take into account inflation differences between currency areas, you will see that the franc has still been rising in real terms lately,” explains economist Alexander Koch (49) from Raiffeisen. In fact, signs point to the franc gaining value again. «W“And it’s nowhere near the level during the last inflation surge,” Koch adds. Raiffeisen expects the euro-franc exchange rate to be at 0.95 within three months. From now on, this won’t be a big change. Frank drifts away from his record strength a bit but remains consistent.

Basically yes. The purchasing power of Swiss people abroad is falling because the euro and the dollar have increased relative to the franc. “For one euro’s worth of goods, you need to put more francs on the counter,” explains Koch. But the franc is still strong against other currencies. Therefore, both holidays and cross-border shopping are still affordable for the Swiss.

The devaluation of the franc favors Swiss export companies and their products become more price competitive. However, this also increases raw material and semi-finished product supply costs. The main problem facing the export sector is a different one: the decrease in demand for capital goods in important sales markets such as Germany. “As long as the appreciation of the franc is offset by lower increases in wages and purchasing costs, Swiss companies will not suffer any price competitive disadvantage,” explains Koch.

“Mortgage interest rates appear to have already reacted to January’s unexpectedly low inflation figures,” says Felix Oeschger of comparison service Moneyland. Because fixed-rate mortgages are actually slightly lower on Wednesday than they are on Tuesday. The interest rate of Saron mortgages is directly dependent on the base interest rate. However, thanks to low inflation figures, the possibility of the Swiss National Bank (SNB) lowering interest rates in early March has increased. Saron mortgage holders will also benefit from this.

Savers could suffer losses if the SNB raises interest rates in early March. It seems unlikely that banks will immediately lower interest rates on savings accounts. However, one or the other bank may waive the reduction or elimination of fees already taken into account.

Source :Blick