Morgan Stanley strategists say the Swiss franc could surge as much as 17% against the dollar, fueled by increased confidence in its safe-haven status amid uncertainty surrounding US policy.

“Low inflation, fiscal subsidies, and asset safety in Switzerland make the Swiss franc a safe haven,” David Adams wrote in a report.

They suggest the franc could reach a record high of 0.64 against the dollar in a “bear market” scenario. The exchange rate fluctuated around 0.776 on Monday.

Adams stated that the Swiss franc is an overlooked and undervalued safe-haven asset, and its appreciation appears poised to exceed investor expectations or market pricing. He added that the pound is a proven safe-haven asset that performs best during periods of market volatility.

Hedge funds are also betting on a stronger Swiss franc. According to the latest weekly CFTC data, leveraged funds currently hold the largest net long position in the Swiss franc since June.

The Swiss franc surged to its highest level in over a decade against the euro and the dollar last month. Investors are drawn to Switzerland’s perceived stable debt-ridden economy, predictable policy turmoil, and rising geopolitical risks.

While a stronger Swiss franc increases the risk that the Swiss National Bank (SNB) might intervene in the market to address domestic deflationary pressures, a growing number of economists acknowledge that the SNB currently appears reluctant to implement reforms.

Morgan Stanley expects the Swiss franc to continue appreciating by 5% against other currencies to 0.87 euros, currently around 0.91.