Safe havens: CHF and JPY retain crisis appeal – RaboResearch

Rabobank’s Jane Foley argues that despite questions over the Dollar’s safe haven role, liquidity and global usage should preserve its crisis function. The report also underlines that the Swiss Franc maintains textbook safe haven characteristics thanks to strong fiscal and external balances, while the Japanese Yen may perform relatively well as current account strength and repatriation flows support it in periods of extreme stress.

Franc and Yen seen resilient in stress

"Cutting through all the complexities regarding the USD’s fundamental outlook, however, is the fact that liquidity in US treasuries and the USD cannot be matched and that the USD still is a key currency for transactions around the globe."

"We would argue that for many investors this will mean that USD will retain its function as a primary safe haven in times of acute market stress."

"The CHF retains strong text-book style safe haven characteristics given its strong budget and current account surpluses and the reality that in a crisis, liquidity trumps returns."

"The JPY may also perform relative well vs. several G10 currencies given its current account position and the tendency for domestic savers to repatriate in times of extreme stress."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)