Every so often, The Economist publishes the “ Big Mac Index” (BMI), a somewhat flippant measure of determining how one currency is valued to another on the relative pricing of a common, in-demand item.When using the US dollar (UUP)(UDN) as the base currency, the Big Mac is the most expensive in Switzerland (EWL)(FSZ), thereby rendering the Swiss franc (FXF) the most overvalued currency in the world on the basis of purchasing power parity (PPP).(Source: The Economist)However, the raw BMI fails to take into account labor costs. Naturally, Big Macs (or most other items generally) will be cheaper in low-labor-cost countries versus those in high-labor-cost countries, such as Switzerland itself, which has the second-highest GDP per capita in the world only behind Luxembourg (a country of only 500k-600k inhabitants).When the index is adjusted for labor costs, the franc becomes one of the dollar’s closest valuation peers on the basis of PPP, where the franc becomes just 4% overvalued relative to the dollar.(Source: The Economist)But based on explicit statements from the Swiss National Bank (SNB), the franc is, in their eyes, “significantly overvalued.” And based on their policy decisions, depreciating the franc seems to be a key focus. Swiss overnight rates are the most negative in the world in nominal terms, at -0.75%.Swiss growth and inflation data remain weak, with deflation plaguing the country for the past 5-6 years. When money gains value over time through deflation, this disincentives consumption. When consumption constitutes up to 70% of developed market economies, this is not a good thing.With sub-1% growth and sub-1% inflation, rates are likely to remain low for an extended duration. Meanwhile, the US, which is currently going at around 2% growth and 2%-2.5% inflation, is in the midst of a tightening cycle. The EU, at 1.5%-2.0% growth and 1.5%-2.0% inflation, is in the midst of tapering its QE program and will likely begin touching the overnight rate starting in early-2019.Switzerland’s monetary policy is behind these two countries and getting rates back up to even 0.00% could take 2-3 years. Accordingly, the franc is likely to remain weak in the interim.There is always the potential for safe haven inflows depending on what occurs in the European Union politically, socially, or economically, but the Swiss franc is still a currency pointing downward.