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A look into the new year

Last year had some surprises in store for the currency markets, and that is likely to be the case this year as well. In an economically and geopolitically challenging environment for foreign trade-oriented companies, the exchange rate is therefore of particular importance.

Whether and how Swiss companies are hedging their currency risks against this backdrop and what forecasts they dare to make for the new year are shown in our FX survey in this publication.

Cover image of UBS Outlook Switzerland 2025

UBS FX Survey 2025

Companies expect stronger franc

Comparison of EURCHF forecasts

Forecast and actual year-end rates (December average)

Great importance of resilience
Source: UBS FX Survey 2025
  • UBS conducted a survey among Swiss companies on currency management in fall 2024. Around 400 companies took part in the survey. 90 percent of them are trade-oriented.
  • Three-quarters of those surveyed expect the EURCHF rate to be between 0.90 and 0.95 at the end of 2025. They therefore expect the franc to be stronger against the euro than they were anticipating in the survey at the end of 2023. On average, the companies surveyed see EURCHF at 0.92 at the end of 2025, which is lower than UBS is predicting (UBS forecast: 0.93).
  • The Swiss franc is also expected to strengthen more against the dollar than in the last survey, substantially so in fact. 75% of survey participants expect the USDCHF exchange rate to be in the 0.80–0.90 range at the end of 2025. This results in an average expected exchange rate for USDCHF of 0.85 (UBS forecast: 0.88).

Mixed economic outlook

Growth and inflation expectations of the surveyed companies

Share of responses, in %

Source: UBS FX Survey 2025
  • Companies have a cautious outlook on the Swiss economy for 2025. Industrials are gloomier than services companies, which comes as no surprise given the weak state of foreign demand.
  • 40% of companies expect inflation in Switzerland to be lower in 2025 than in 2024, at between 0.6% and 1%.
  • According to the respondents, the SNB's key interest rate is likely to be 0.5 percent at the end of 2025. Considerably more companies expect further rate cuts from the European Central Bank (ECB) and the Federal Reserve.

Euro is most important currency

What is your main currency for buying?

Share of responses, in %

Source: UBS FX Survey 2025
  • The key purchasing currency for nearly half of all companies surveyed is the euro, followed by the Swiss franc and the US dollar. The British pound, Japanese yen, and other currencies play only a minor role. This applies to both industrial and service companies.
  • Export-oriented firms most commonly sell in euro (55%), followed by the US dollar (22%) and the franc (20%). For companies with a domestic focus, which includes many services providers, the franc is clearly the most important.
  • This dominance of the euro in external trade is also apparent in the latest survey.

Euro most frequently hedged

If you hedge, which currencies do you hedge?

Share of responses by companies that hedge, in %, more than one answer possible

Source: UBS FX Survey 2025
  • Almost half of those surveyed (46%) said they hedge their currency risk. Companies that trade abroad do this more frequently that those that focus on the domestic market.
  • The currency most frequently hedged is the euro. In second place is the US dollar, then sterling.
  • The average level of hedging is 59%, in line with the average seen in recent years. This figure is higher among services companies (62%) than for industrials (54%), likely because the latter can more commonly benefit from natural hedging.

Risks from (geo-)politics

  • More than half of the companies surveyed expect currency risk this year to be on a similar scale to 2024. Just under 30% expect more currency risk, and only 10% are planning for less.
  • The majority of companies therefore have no plans to adjust their hedging ratio in 2025.
  • Companies see the biggest driver of market volatility as being (geo)political events, such as the economic policy Donald Trump will pursue as US president, the war in Ukraine, and tensions in the Middle East.
UBS Outlook Switzerland January 2025

UBS Outlook Switzerland January 2025

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Economy and financial markets

Back to trend in 2025

  • We expect robust global economic growth in 2025 as well. All regions will contribute to this: in the US, it should be driven by lower interest rates and taxes, in Europe by higher real wages, and in China by the government stimulus program. This should in turn boost the Swiss economy, which, adjusted for sporting events, is likely to grow by 1.5% in 2025— close to long-term growth.
  • Consumption demand should remain solid. Expected wage growth of 1.4% should support consumption, although a likely slightly higher unemployment rate of 2.8% (annual average) may be a drag. Exports and investments should benefit from a recovery in foreign trade.
  • We anticipate a slight further decline in Swiss inflation in 2025. Falling electricity prices, a stronger franc, and a decrease in the reference interest rate are likely to lead to an inflation rate of 0.5%, down from 1.1% in 2024.

SNB accelerates the easing pace

  • The Swiss National Bank (SNB) lowered its policy rate by 50bps to 0.50%, a larger move than expected. We keep our forecast of an additional rate cut in 2025, bringing the policy rate down to 0.25%.
  • While a negative policy rate appears unlikely in our view, it is no longer off the table. Should further monetary easing become necessary with the policy rate already at 0%, we expect the SNB to prioritize interventions in the foreign exchange market before resorting to negative rates.
  • As the SNB's rate reduction is largely anticipated by financial markets and reflected in the current yield of 10-year Swiss government bonds, long-term rates should remain stable over the next 12 months.

Forecasts

Forecasts
Source: UBS

Marketing Publications: Retail Outlook 2025, PMI and Financial Market Survey

The following content is provided solely for your information and UBS marketing purposes. It is not subject to the legal requirements regarding the independence of financial analysis.

Retail Outlook 2025

  • Real Swiss retail sales grew slightly in 2024 (UBS estimate: +0.5 %), thanks to robust immigration and positive real wage growth. This is likely to continue in a similar range in 2025 (UBS forecast: +0.6 %).
  • The aging of society means that older consumers are gaining in importance. Retailers must not lose sight of this customer group, as it offers opportunities.
  • For the industry, it is essential to thoroughly understand and specifically address the specific consumption needs and communication behavior of the generations.

PMI Switzerland: Strong start for the services sector

  • The procure.ch Purchasing Managers’ Index (PMI) rose by 0.5 points to 47.5 points in January, but remains below the growth threshold of 50 points.
  • The PMI for the services sector climbed from 51.3 points in December to 57.2 points in January, the highest level in two and a half years, reflecting a possible improvement in sentiment.
  • Despite Donald Trump taking office, expectations in the industrial sector with regard to protectionism remain largely unchanged.

UBS CFA indicator: A silver lining in uncertain times

  • The UBS CFA Society Switzerland indicator started the year on a positive note, rising by 37.7 points compared to the previous month, the largest increase since April 2020.
  • Fewer analysts see lower short-term rates, especially in the US, while opinions are divided regarding the USDCHF exchange rate.
  • Key risks to financial markets stem from rising government bond yields and a potential AI bubble, according to survey participants.