Switzerland’s central bank has started favoring euros over dollars in its reserve purchases, signaling a possible shift in global reserve trends.
In a move that’s attracting attention in global finance circles, the Swiss National Bank (SNB) has quietly altered its foreign exchange strategy: during the April–June quarter, it purchased over 5 billion Swiss francs worth of foreign currency, with the bulk of those purchases directed at euros, not the U.S. dollar. This marks a notable shift in how Switzerland manages its reserves.
Historically, central banks tend to hold large proportions of U.S. dollars in reserves. But in Switzerland’s case, data shows the euro’s share of its foreign assets has now eclipsed the dollar’s, rising to about 39% compared to 37% for the greenback. This is the first time since 2020 that the dollar has fallen behind in the SNB’s reserve mix.
Why this pivot? The SNB has long been battling against an overvalued Swiss franc, particularly as global markets looked to safe-haven currencies. The franc had strengthened sharply earlier in the year, putting pressure on Swiss exports and inflation. By intervening in forex markets—primarily by buying euros—the SNB aims to stabilize the franc and manage deflationary risks.
Complicating matters are tensions in U.S.–Swiss trade relations. The U.S. has raised tariffs on Swiss goods, and Switzerland has been under scrutiny for currency intervention practices. In recent statements, the SNB, Swiss Finance Ministry, and the U.S. Treasury jointly affirmed that no party is targeting exchange rates for competitive advantage—yet such public affirmations underscore just how politically sensitive intervention decisions are.
From a broader perspective, this shift may carry implications for currency market dynamics. If more central banks re-examine their dollar-heavy reserves, it could weaken the dollar’s dominance over time and tilt capital flows toward the euro and other major currencies. Analysts are watching closely to see if this is a one-off or the start of a new trend.
Sources
- Economic Times — “Sign of the times as Swiss buy euros, not dollars”
- Reuters coverage of the SNB’s foreign currency interventions
