Carry traders eye franc and krona as yen’s funding appeal ebbs
Investors are looking out for alternative currencies to borrow in to buy higher-yielding assets following the Japanese currency's recent rise.
The yen has become less attractive for carry trades as its appeal diminishes, according to various financial institutions. Russell Investments and Allianz Global Investors are now favoring the Swiss franc as a prime candidate for funding carry trades, pointing to a widening monetary-policy divergence between Switzerland and Japan.
JPMorgan Chase & Co. strategists have recommended the Swedish krona and the Canadian dollar as attractive alternatives. These currencies are competing to replace the yen in carry trades, where investors borrow in low-yielding currencies to purchase higher-yielding assets. The yen's reputation as the preferred currency for such trades has been waning due to rising Japanese bond yields and joint U.S.-Japanese intervention to support its value. This shift underscores a preference for higher interest rates and a stronger yen in Japan.
Written by urgent.news from Japan Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
