The structural franc problem
The Swiss franc remains one of the world's principal safe-haven currencies. During periods of geopolitical stress, CHF appreciation compresses the margins of exporters whose cost base is domestic but whose revenue is denominated in EUR, USD or GBP.
A layered hedge ratio
Rather than hedging a single annual budget rate, we recommend a rolling, layered programme:
- 70–80% of forecast exposures hedged for the next 0–3 months
- 50–60% hedged for 4–6 months
- 25–40% hedged for 7–12 months
Each month, new layers are added at prevailing forward rates. The result is a blended hedge rate that smooths volatility while avoiding the concentration risk of a single execution date.
Instrument selection
Outright forwards remain the core instrument for highly probable cash flows. For less certain exposures — such as tender-stage contracts — vanilla options or participating forwards preserve upside while capping downside.
Governance
A board-approved hedging policy, documented hedge accounting designations under the applicable reporting framework, and monthly effectiveness reviews are the minimum governance standards we expect of any counterparty entering a structured FX programme with our desk.
This publication is for informational purposes only and does not constitute financial advice, an offer or a solicitation to buy or sell any financial instrument.