Currencies such as the Swedish krona and Swiss franc are emerging as prime candidates to finance carry trades as the yen’s recent surge makes it a less reliable bet than in the past.
Russell Investments and Allianz Global Investors favor the franc, citing a widening monetary-policy divergence between Switzerland and Japan, while JPMorgan Chase & Co. strategists recommend the Swedish krona and the Canadian dollar as attractive options.
All those are vying to replace the yen in carry trades, in which investors borrow in low-yielding currencies to buy higher-yield assets. For decades, the yen was traders’ currency of choice to sell but now its appeal is fading as Japan’s bond yields rise and joint U.S.-Japanese intervention to support it underscored a preference for higher Japanese interest rates and a stronger yen.
