Euro invoicing dominance in Swiss trade amplifies inflation impact of CHF depreciation, Commerzbank analysis shows.
Swiss National Bank policy allowing a weaker franc has raised inflation by 0.18 percentage points after 12 months, according to a structural exchange rate pass-through model. The effect stems from euro-denominated trade, which dominates short-term inflation dynamics in Switzerland.
The euro channel’s impact is 3.8 times stronger than the US dollar channel after one month, the model finds. This contrasts with 2022, when a strong franc reduced inflation, highlighting the sensitivity of Swiss prices to currency movements.
Commerzbank expects the SNB to hold rates steady, with EUR/CHF likely to benefit over the medium term as inflationary pressures remain modest.