The World's Strongest Currency Is Also Super-Competitive

Switzerland's success shows that a nation can revalue its way to prosperity.

- Ruchir Sharma

Amid all the talk about whether the US is keen to devalue the mighty dollar as one way to revive American manufacturing, it is worth noting that the dollar is not the world's strongest currency and has not been for decades. That title goes to the Swiss franc, and the mighty franc has done nothing to undermine Switzerland's competitiveness.

The world's richest major economy has both a strong currency and a strong manufacturing base. The Swiss franc has been the top-performing currency over the past 50 years, 25 years, 10 years, and five years. It is near the top even over the past year when some of the more beleaguered currencies have staged a comeback against the US dollar. Nothing can compare for durable strength.

Yet Switzerland also defies the assumption that a strong currency will undermine a nation's trading prowess by making its exports uncompetitive. Its exports have risen and are near historic highs both as a share of Swiss GDP (75 per cent), and as a share of global exports (near 2 per cent).

The global conversation has become unduly obsessed with currency valuations, which are just one of the factors that shape a nation's competitive position. Like Germany and Japan in their heydays, Switzerland has gained a reputation for goods and services of such high quality that the rest of the world is willing to pay a currency premium for the "Made in Switzerland" label.