French debt: why is the Swiss franc not yet acting as a safe haven?
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PME Magazine
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Daniel Varela Chief Investment Officer
In PME Magazine, Daniel Varela, Chief Investment Officer at Piguet Galland, discusses the tensions surrounding French debt and their implications for the Swiss franc. Despite concerns weighing on bond markets, he believes that the interest rate differential between the eurozone and Switzerland continues to favour the euro against the franc.
France’s draft 2027 budget, presented on 1 October, was poorly received by investors. Against an already tense pre-election and social backdrop, the yield spread between ten-year French and German government bonds reached its highest level since the sovereign debt crisis.
For Swiss investors, this situation raises a question: could the franc, which has long served as a safe haven during periods of tension in Europe, resume this role and halt its decline against the euro?
The interest rate differential continues to favour the euro
Speaking to PME Magazine, Daniel Varela tempers these expectations.
“The interest rate differential remains very much in the euro’s favour against the franc.”
The European Central Bank raised its deposit rate to 2.50% on 10 September, while eurozone inflation reached 3.8% in September, its highest level in three years. The Swiss National Bank, meanwhile, maintained its policy rate at 0% on 24 September 2026.
This differential is evident across the entire yield curve. From very short maturities to medium- and long-term bonds, Daniel Varela points out that “investors benefit from significantly higher returns by investing in the single currency, compared with rates that remain close to their floor in Switzerland”.
EUR/CHF remains on an upward trend
Against this backdrop, the fundamentals continue to favour the euro against the Swiss franc.
“Economic and market fundamentals therefore continue to point to an upward trend for EUR/CHF,” explains Daniel Varela.
With the euro trading at around CHF 0.93 in early October, the path towards parity mentioned by Piguet Galland in September therefore remains the underlying trend.
Read the full interview on the PME Magazine website (french only)
Authors
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PME Magazine
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A graduate of the University of Geneva in Business Administration with a specialisation in finance, Daniel Varela began his career in 1989 as a fixed‑income portfolio manager. He joined Banque Piguet & Cie in 1999 as Head of Institutional Asset Management, also overseeing the Bank’s fixed‑income analysis and management. In 2011, he took charge of Piguet Galland’s investment strategy and the Investment Department. He has been a member of the Executive Committee since January 2012, serving as Chief Investment Officer.
