Swiss Franc Gains Popularity as Funding Currency Amid Yen Intervention Concerns

The Swiss Franc (CHF) is gaining popularity as a funding currency among investors due to its low volatility and attractive borrowing costs. According to Chris Turner at ING, investors are increasingly favoring franc funding over Japanese Yen (JPY) funding in order to avoid potential intervention from Tokyo and Washington.

One reason for this preference is the lower volatility of the CHF compared to the JPY. This makes it a more stable option for investors who want to avoid sudden market fluctuations. Additionally, the Swiss Franc offers cheaper borrowing costs than the Yen, making it an attractive choice for those looking to fund their trades.

Turner also notes that short CHF/JPY positions will become increasingly popular if investors believe intervention is effective in manipulating currency markets. This is because short CHF/JPY positions are one of the few ways to express a carry-positive yen view, and the two currencies have similar investment characteristics.