With the recent sharp appreciation of the yen, making it less reliable as a financing currency than before, currencies such as the Swedish krona and the Swiss franc are becoming popular candidates for arbitrage trading financing. Russell Investments Ltd. and Allianz Global Investments favor the Swiss franc on the grounds that the monetary policy differentiation between Switzerland and Japan is growing; J.P. Morgan strategists recommend SEK and CAD, which are also attractive choices. These currencies are all competing for the yen's position in arbitrage trading in the past. In such transactions, investors borrow low-yielding currencies and then buy higher yielding assets. The yen has been the preferred financing currency for arbitrage transactions for decades, but now its appeal is declining because Japanese bond yields continue to rise, and the joint intervention of the US and Japan in the foreign exchange market to support the yen also highlights the policy trend of hoping for higher Japanese interest rates and a stronger yen.

With the recent sharp appreciation of the yen, making it less reliable as a financing currency than before, currencies such as the Swedish krona and the Swiss franc are becoming popular candidates for arbitrage trading financing. Russell Investments Ltd. and Allianz Global Investments favor the Swiss franc on the grounds that the monetary policy differentiation between Switzerland and Japan is growing; J.P. Morgan strategists recommend SEK and CAD, which are also attractive choices. These currencies are all competing for the yen's position in arbitrage trading in the past. In such transactions, investors borrow low-yielding currencies and then buy higher yielding assets. The yen has been the preferred financing currency for arbitrage transactions for decades, but now its appeal is declining because Japanese bond yields continue to rise, and the joint intervention of the US and Japan in the foreign exchange market to support the yen also highlights the policy trend of hoping for higher Japanese interest rates and a stronger yen.