How long will the franc rise?

The US banking crisis and the latest rate hike in Switzerland gave a tailwind to the franc. Experts explain why this trend is turning again.

Vienna. The worst is likely to end for now, after the banking turmoil erupts. As a reminder, in the United States, deposit insurance and the Treasury Department intervened in Silicon Valley Bank to prevent panic in the financial sector. It remains to be seen if another crisis is imminent. LBBW urges caution. “Smaller US banks may face new impacts,” says Moritz Cramer, chief economist at the bank.

Cramer points to an increase in interest rates on US mortgage loans. The 15-year interest rate just recently was close to six percent, a sharp increase compared to 2021, when the rate was still around 2 percent. Cramer points to the most recent survey by the Association of American Mortgage Banks, according to which the value of expired commercial real estate is set to reach $728 billion this year. “This corresponds to 16 percent of the existing volume.” It will only be possible to extend loans on lower terms. So Kramer fears the increasing failures.

Switzerland takes action