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Capital Flows and the Swiss Franc

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The Swiss franc is known to appreciate strongly during financial market turmoil, demonstrating its status as a typical safe haven currency. One possible mechanism behind this appreciation during times of global turmoil is assumed to be higher capital inflows to Switzerland. This paper attempts to find some empirical evidence for this presumption. The analysis reveals that capital flow variables are not necessarily coincident with the movements of the Swiss franc. Interest rate differentials, a traditional determinant of exchange rates, co-move only weakly with Swiss franc movements. However, a robust and stronger link between variables that capture global or regional market uncertainty and movements of the Swiss franc is observed. Specifically, the information channel rather than new cross-border investment is found to be coincident with the Swiss franc. The weak link between capital flows and the exchange rate is confirmed to some extent for some other countries.


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Author information

Correspondence to Pınar Yeşin.

Additional information

I thank two anonymous referees, Philippe Bacchetta, Adrian Bruhin, Andreas Fischer, Christian Grisse, Henrike Groeger, Christoph Meyer, seminar participants at the Swiss National Bank, and conference participants at the 2013 Conference of the Swiss Society of Economics and Statistics in Neuchâtel for their helpful comments and discussions. I also thank Elisabeth Beusch and Henrike Groeger, who provided excellent research assistance at different stages of this project. Any remaining errors are my own. The views expressed in this paper are those of the author and do not represent those of the Swiss National Bank.

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Yeşin, P. Capital Flows and the Swiss Franc. Swiss J Economics Statistics 153, 403–436 (2017) doi:10.1007/BF03399513

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  • JEL-ckssification
  • F21
  • F31
  • F32


  • Exchange rate
  • safe haven currency
  • gross capital flows
  • net flows
  • private flows