Why is AUD/CHF Going Down?The Australian dollar (AUD) has been on a downward trajectory against the Swiss franc (CHF) since the beginning of October 2023. The AUD/CHF exchange rate has fallen from 0.60 to 0.58, representing a decline of over 3%.
There are a number of factors that have contributed to this decline. One factor is the ongoing strength of the Swiss franc. The CHF is considered to be a safe-haven currency, and investors tend to flock to it during times of uncertainty. The current global economic climate is uncertain due to a number of factors, including the war in Ukraine, rising inflation, and concerns about a recession. As a result, the CHF has been in high demand, which has pushed its value higher.
Another factor that has contributed to the decline in the AUD/CHF exchange rate is the weakening of the Australian dollar. The AUD has been under pressure due to a number of factors, including the slowdown in the Chinese economy, rising interest rates in the United States, and concerns about the outlook for the global economy. As a result, the AUD has fallen against a number of currencies, including the CHF.
The image attached to the query shows the AUD/CHF exchange rate over the past year. The chart shows that the exchange rate has been on a downward trajectory since the beginning of October 2023. The decline in the AUD/CHF exchange rate is likely to continue in the near term, as the factors that are driving the decline are expected to remain in place.
Here is a more detailed explanation of the factors that are driving the decline in the AUD/CHF exchange rate:
Strength of the Swiss franc: The CHF is considered to be a safe-haven currency, and investors tend to flock to it during times of uncertainty. The current global economic climate is uncertain due to a number of factors, including the war in Ukraine, rising inflation, and concerns about a recession. As a result, the CHF has been in high demand, which has pushed its value higher.
Weakness of the Australian dollar: The AUD has been under pressure due to a number of factors, including the slowdown in the Chinese economy, rising interest rates in the United States, and concerns about the outlook for the global economy. As a result, the AUD has fallen against a number of currencies, including the CHF.
Trade flows: Australia and Switzerland have a relatively small trade relationship. This means that the AUD/CHF exchange rate is not as sensitive to trade flows as some other currency pairs. However, the slowdown in the Chinese economy is likely to have a negative impact on the Australian economy, and this could lead to a further decline in the AUD/CHF exchange rate.
Interest rates: The Swiss National Bank (SNB) has maintained a negative interest rate policy for several years. However, the SNB is expected to raise interest rates in the near future. This is likely to make the CHF more attractive to investors, and could lead to a further decline in the AUD/CHF exchange rate.
Overall, the decline in the AUD/CHF exchange rate is likely to continue in the near term, as the factors that are driving the decline are expected to remain in place. Investors should closely monitor the global economic climate, the strength of the Swiss franc, and the performance of the Australian economy to assess the outlook for the AUD/CHF exchange rate.
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