Full Breakdown
Shifting Dynamics in Safe-Haven Currencies Amid Economic Turbulence
2/13/2026, 9:31:31 PM
Evolving Landscape of Safe-Haven Currencies
Traditionally, the U.S. dollar, Swiss franc, and Japanese yen have been regarded as safe-haven currencies, expected to retain value during geopolitical or economic instability. However, recent trends have revealed increased volatility among these currencies. In 2025 and into 2026, both the dollar and yen experienced significant declines, while the Swiss franc appreciated, raising concerns for Switzerland's export-driven economy.
Impact of U.S. Trade Policies
U.S. President Donald Trump's introduction of tariffs in 2025 significantly disrupted international trade, leading to a "sell America" trend that adversely affected the dollar. According to a December note from Swiss private bank Julius Baer, Trump's "One Big Beautiful Bill Act" has put the U.S. on an "unsustainable debt trajectory," contributing to the dollar's decline. The dollar index, which measures the currency against a basket of peers, fell 9.37% in 2025 and continued to drop in 2026, reaching its lowest level in nearly four years.
The Japanese Yen's Volatility
The Japanese yen has also faced fluctuations, particularly following the ascension of Prime Minister Sanae Takaichi, whose expansionary fiscal policies led to a selloff in the currency. The yen weakened significantly, dropping from around 156 to 150 against the dollar in early 2025, before experiencing a brief recovery. Analysts from Dutch bank ING predict that the yen may approach the 160 level again, but this could prompt intervention from authorities to stabilize the currency.
Strength of the Swiss Franc
In contrast, the Swiss franc has gained approximately 13% against the U.S. dollar over 2025, reaching an 11-year high against the greenback and the euro. Despite its strength, this appreciation poses challenges for Switzerland, which is grappling with an inflation rate of just 0.1%. The Swiss National Bank (SNB) faces a complex monetary policy landscape, as a stronger franc could exacerbate disinflationary pressures on the economy. The SNB is cautious about reinstating negative interest rates, a policy that was unpopular during its previous implementation from 2015 to 2022.
Criticism of the Dollar's Safe-Haven Status
Critics have begun to question the dollar's status as a safe haven. George Saravelos, head of FX research at Deutsche Bank, labeled the dollar's safe-haven status as a "myth," arguing that it does not consistently rally during periods of risk aversion. Cole Smead, CEO of Smead Capital Management, echoed this sentiment, predicting a prolonged bear market for the dollar, reminiscent of past market manias.
Conflicting Reports on Currency Trends
While the dollar's decline and the yen's volatility are widely reported, there are conflicting views on the future trajectory of these currencies. Some analysts believe the yen will stabilize, while others anticipate further intervention. The Swiss franc's strength is similarly debated, with concerns about its impact on Switzerland's economy.
Conclusion
The landscape of safe-haven currencies is undergoing significant changes, driven by geopolitical events and economic policies. As the dollar and yen face challenges, the Swiss franc's strength raises questions about its sustainability and the broader implications for Switzerland's economy. The evolving dynamics of these currencies will continue to be closely monitored by investors and policymakers alike.
