Swiss Franc: Export strains with strong CHF – Commerzbank

Commerzbank’s Michael Pfister analyses how the strong Swiss Franc (CHF) and an undervalued Chinese Yuan (CNY) are weighing on Switzerland’s export competitiveness. He notes that overall market share gains since 2019 disappear once precious metals are excluded, highlighting structural weakness in medicines, chemicals and machinery. Watches remain resilient, suggesting differentiated sectoral impacts from the franc’s appreciation.

Strong franc pressures key exports

"In fact, the Swiss franc is the only G10 currency that is overvalued against the US dollar according to OECD purchasing power parity - by more than 10%. As the franc has also appreciated significantly against the euro in recent years, this has likely exerted additional pressure on price competitiveness."

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"If we consider Swiss exports as a whole, Switzerland actually gained market share in its largest export markets between 2019 and 2024. This result remains robust even when 2025 - a year distorted by US tariffs - is included. But there is a problem with the figures: when adjusted for precious metals, Switzerland has, on average, lost market share."

"In contrast, Switzerland has lost market share across the board in its largest export category (medicines) since 2019, with some losses amounting to double-digit percentage points. While China has also gained market share, this has only been to a lesser extent. The majority of this market share has thus been taken from Swiss exporters by other countries, suggesting that the weak CNY is unlikely to be the primary focus here."

"Switzerland has also suffered significant market share losses in the chemicals sector. In contrast to the pharmaceutical sector, however, the winner is clearer here: China has made substantial gains (not only at the expense of Swiss exporters, but of other countries too). In other words, the exchange rate effect is most likely to play a role in this sector."

"It is this differentiation that makes it so difficult to pinpoint the effect of the franc’s appreciation. In the watch sector, for example, the effect appears to be minimal. In the pharmaceuticals sector, the problem is not China, but rather other competitors."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)