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40% of Swiss companies hedge their currency risks – estimates of economic development are mixed

Credit Suisse publishes the 2024 FX Study, which is based on a survey of around 1,000 companies

According to the Credit Suisse FX Survey, Swiss companies expect a slightly stronger euro and a stronger US dollar in 2024. At the same time, expectations for economic development differ. The study also shows that currency management is very important for Swiss companies: Around 40% of companies actively hedge their currency risks, with an average hedging ratio of almost 60%.

As of the end of 2024, the companies surveyed expect the EUR/CHF exchange rate to stand at 0.95. For the US dollar, they forecast a rate of 0.90 against the Swiss franc.

The euro is first choice for purchasing, while the Swiss franc dominates in terms of sales

The survey shows that the euro is the most widely used currency in purchasing for more than half of the companies surveyed (55%). The Swiss franc is second (30%), followed by the US dollar (12%). There are only minor differences between the sectors. Foreign currencies dominate when it comes to importing companies, while domestic and export-oriented companies mainly purchase in Swiss francs. For 54% of companies, the Swiss franc is the most important currency for sales, followed by the euro and the US dollar. As expected, however, the Swiss franc is much less significant in sales for exporters (17%) than for importers (93%) or companies with a focus on domestic operations (83%).

Inconsistent expectations regarding economic development

Forecasts differ regarding the development of economic output for 2024: While almost a third of the companies surveyed expect real growth in Switzerland's gross domestic product (GDP) to continue to weaken, a quarter expect it to accelerate. Around half expect real GDP growth to remain stable. At the same time, a clear majority (61%) of survey participants expect inflation to rise further by the end of 2024. Expectations regarding the development of the Swiss National Bank's (SNB) policy rate are also mixed: 38% expect the SNB to raise the policy rate again during the year. Almost the same number (37%) do not expect any change in the policy rate, and a quarter of respondents even expect it to fall during the year.

40% of companies hedge their currency risks

Against this backdrop, around 40% of the companies surveyed in both the industrial and service sectors hedge their currency risks. The hedging ratio differs in the two sectors, however: Service companies have a significantly higher degree of hedging (66%) than the industrial companies surveyed (53%). This is likely to be due to the fact that companies in industry are more likely to benefit from natural hedging: 40% of the industrial companies surveyed buy and sell euros. For service companies, the figure is only 15%.

The publication "FX Survey 2024. Assessment of exchange rate developments" includes an analysis of the survey, a market outlook, and articles by experts. It is available in English, French, German, and Italian at www.credit-suisse.com/fx.