Heightened global economic uncertainty is driving increased demand for safe-haven currencies, particularly the Japanese yen and Swiss franc. Investors are flocking to these currencies as they seek a safe harbor amidst growing concerns about slowing economic growth and escalating geopolitical tensions.
The yen and franc are traditionally viewed as safe-haven assets due to their countries’ strong current account surpluses and stable political environments. In times of market turmoil, investors often seek the relative stability and security offered by these currencies.
Several factors are contributing to the current risk-averse sentiment. These include:
- Concerns about a potential global recession
- Geopolitical risks, such as ongoing conflicts and trade disputes
- Uncertainty surrounding central bank policies
As long as these uncertainties persist, the demand for safe-haven currencies is likely to remain elevated. This could lead to further appreciation of the yen and franc against other currencies.
