Swiss Franc Draws Record Bearish Bets From Japan Margin Traders
(Bloomberg) — Japan’s margin traders have ramped up bearish bets on the Swiss franc to a record high as they look to profit from a divergence in borrowing costs between the two nations.
The traders’ net short positions on the Swiss currency rose to ¥348.9 billion ($2.3 billion) this month, according to Bloomberg’s analysis of data from the Financial Futures Association of Japan and Tokyo Financial Exchange. That’s the highest ever since records became available in 2008 and almost double the level seen at the start of the year.
The bet seeks to capitalize on the disparity between the monetary policy of the two economies, which are home to the world’s lowest-yielding major currencies. The Swiss National Bank cut its policy rate to zero in June while the Bank of Japan is expected to continue tightening policy after increasing borrowing costs in January to 0.5%.
“If you consider retail investors’ penchant for higher-yielding currencies, this is a reflection of their single-minded intent to sell the franc,” said Marito Ueda, managing director at SBI Fxtrade Co. in Tokyo.
The Swiss franc’s forward-implied yields are in negative territory, while the yen’s were at about 0.27% on a three-month basis, meaning shorting the franc against the yen earns positive carry. But traders who began boosting short positions in the pair at the start of the year stand to incur a loss of almost 10%.
“These positions reflect the monetary policy divergence between Switzerland and Japan,” said Rikiya Takebe, a senior strategist at Okasan Securities Co. in Tokyo. Still, “carry returns must have been wiped out by the spot move.”
©2025 Bloomberg L.P.
