Carry Traders Flee Yen Volatility for Stable Swiss Franc

Carry traders are increasingly turning to the Swiss franc as their preferred funding source due to concerns about intervention and higher interest rates affecting borrowing in yen.

Hedge funds have boosted their net short position in the Swiss franc to near a two-month high, according to data from the Commodity Futures Trading Commission. The increase was seen in the week through August 11.

In contrast, hedge funds reduced their yen shorts for a second consecutive week. This shift suggests that traders are seeking more stable and attractive funding options due to rising volatility in the Japanese currency.