The logic of "cheap yen financing" has changed! Funds are repositioning for "Carry Trade" as the Swiss franc and Swedish krona compete for the funding currency slot.

According to Zhitong Finance APP, the carry trade centered on the Japanese yen exchange rate appears to be undergoing a weakening of its financing advantage and a restructuring of funding sources. The yen's appreciation trajectory is eroding the yen's appeal as a carry funding currency, prompting investors to consider alternatives such as the Swiss franc and the Swedish krona. If this major adjustment is accompanied by a contraction in financial market leverage and large-scale selling of highly liquid risk assets such as equities and bonds, it could create significant selling pressure on related stocks, bonds, and high-yielding currencies. Rising expectations for Bank of Japan rate hikes, combined with joint U.S.-Japan yen-buying intervention, have substantially increased the overall exchange rate risk of borrowing low-interest-rate yen to hold overseas assets in the recent period.