Is The Swiss Franc Proving Stronger Than The Euro?

When the Euro finally came into being as a proper paper and coins currency at the start of 2002, eleven countries ditched their old currencies for ever and took on those new notes and coins.  You can get more information on these currencies if you go to http://en.wikipedia.org/wiki/Euro.

Since then several other countries have followed suit, but the currencies that really stand out are the ones which haven’t yet adopted the Euro.  Of these, perhaps the two that immediately come to mind are the British pound and the Swiss franc.

And as far as the Swiss franc is concerned, December 2008 was something of an example which showed the Euro isn’t always the strongest currency around.  Size isn’t always the most important aspect of the whole situation, and so we’ll take a look at how the franc took charge during the final month of 2008.

On the first day of December the Swiss franc claimed 0.6552 Euros as its exchange rate.  That figure stayed roughly steady for the first few days, since the figures never shifted from the 0.65 ballpark.

But it seemed as if first blood was going to go to the Euro that month.  On the 8th of December the exchange rate went down to 0.6414, showing a slightly weakened Swiss franc and a stronger Euro.  There has been much talk recently about how the Euro is weathering the recessionary storms being whipped up all around the world, but not so much news on how other smaller currencies are coping.

Well it certainly seemed as if the Euro was weathering those aforementioned storms rather better than the Swiss franc was.  By the time we reached the 11th, the exchange rate had once again gone in favor of the Euro, and reached 0.6354. 

Whenever the Euro gets some good results against another European currency, there are always people popping up saying that this proves that particular currency should have been ditched.  The country in question would have been far better off under the Euro, after all, wouldn’t it?

But of course when things go back in the opposite direction – as they did last month – things change and people are suddenly silenced by that reversal of fortunes.

Incidentally if you want to get a taste of how things might develop in the coming months as far as the Swiss franc is concerned, read the report on the following page - to find out more about how 2009 and beyond might pan out.

And indeed the Swiss franc fought back valiantly after a few days of being in the doldrums with a rate in the 0.63 range.  After the 18th saw a jump to 0.6507, things levelled out to 0.6473 over the weekend, before regaining the 0.65 territory the following week.  It seemed as if the small but strong Swiss franc wasn’t going to be stomped on by the mighty Euro – and this was proof of just that.

Once we were back into 0.65 territory on the 22nd December, we didn’t slip back for the rest of the month.  Once the Swiss franc closed on 0.6647 on the day before Christmas, it seemed clear that the Euro had met a match in this currency that postponed any vague thoughts of it joining the single currency.

The final figure that was reached on New Year’s Eve was better still, when the Swiss franc claimed 0.6734 Euros.  Anyone checking their currency converter to see how many Euros they could get for their Swiss francs would have been delighted to end the year on a good note.

So it seems that this is something of a David and Goliath story.  The small currency that covers a much smaller area of the world can indeed prove to be a match for the major single currency that is the Euro.  Of course, in current times it can be difficult to see which currencies will weather the financial storms better than others.  What is relevant now may be no more than a distant memory in weeks and months to come, as we have seen before.

But for the moment the Swiss franc is certainly a force to be reckoned with.  And the Euro must learn to accept that.