Why JPY, CHF, And USD Are Safe Havens

Key takeaways

• “Safe-haven” currencies often strengthen when markets turn risk-off, but the effect is not guaranteed.¹

• JPY, CHF, and USD tend to benefit from deep liquidity, investor behavior, and policy credibility.¹ ²

• For businesses, the goal is not predicting moves. It is building an FX process that reduces surprises.

When markets get jittery, you will often hear the same three tickers: JPY, CHF, and USD. They are commonly described as “safe-haven” currencies because they have historically tended to hold value, or even strengthen, during periods of global stress.¹

That does not mean they always rise, and it definitely does not mean they are “safe” in every scenario. What it does mean is that there are repeatable reasons these currencies can attract demand when uncertainty is high.

This guide breaks down what “safe haven” really means, why JPY, CHF, and USD get lumped into that category, and what practical steps finance teams can take to manage exposure without trying to time the market.

What “safe haven currency” actually means

A safe-haven currency is typically one that has tended to appreciate during risk-off episodes, when investors reduce exposure to riskier assets and seek liquidity and perceived stability.¹ ³

Two important clarifiers:

• It is an observed pattern, not a rule.

• The “haven” is often relative. It may rise against risk-sensitive currencies while falling against another haven currency.

Researchers often measure safe-haven behavior by looking at how currencies move when risk indicators spike (for example, equity selloffs or volatility shocks).¹ ³

Why some currencies behave like safe havens

Safe-haven behavior usually comes from a mix of structural and behavioral drivers:

• Liquidity and depth: Big, liquid markets make it easier to move large amounts quickly.

• Perceived institutional stability: Strong monetary frameworks and predictable rule-making can attract capital.

• Reserve and invoicing roles: If a currency is widely held or used for trade and finance, demand can rise during stress.

• Safe assets: A currency often looks “safer” when its government bond market is deep and trusted.

These forces can overlap differently for each currency.

The USD: liquidity, reserves, and “global cash”

The US dollar has a unique position in the global financial system.

Why USD can strengthen in stress

• Reserve currency role: Central banks and institutions hold large USD reserves for trade and stability.⁴

• Deep FX market liquidity: The USD is involved in the majority of global FX trading volume.²

• Safe asset demand: US Treasuries are widely treated as a core “safe” asset during stress, which can support USD demand.

What this means for businesses

If your invoices, debt, or supply chain are USD-linked, global stress can move USD quickly. The practical response is not guessing direction. It is making sure your pricing, budgeting, and hedge coverage windows match your actual payment timing.

The JPY: a classic risk-off signal, for specific reasons

The Japanese yen is often labeled a safe haven, but the reasons are a bit different than the USD.

Why JPY can strengthen in risk-off markets

Researchers have pointed to factors like:

• Repatriation flows: In periods of stress, Japanese investors and institutions may bring funds back home.⁵

• Funding dynamics: When investors unwind leveraged positions, yen-funded trades can reverse, supporting JPY.⁵

• Market behavior: JPY has historically shown recurring “risk-off” patterns in empirical studies.¹ ³ ⁵

The key nuance

JPY is a “safe haven” in the sense that it has often benefited when risk positions unwind. It can also be sensitive to interest rate differentials and Bank of Japan guidance, which may pull it in the other direction in certain regimes.

The CHF: stability, policy credibility, and small-market effects

The Swiss franc is also widely cited as a safe-haven currency, and Switzerland’s central bank has explicitly discussed the franc’s safe-haven nature in official communications.⁶

Why CHF can attract haven flows

• Perceived stability: Switzerland is often viewed as politically and financially stable.

• Policy credibility: The Swiss National Bank emphasizes price stability, and CHF appreciation has been a recurring challenge in downturns.⁶

• Capital inflows in stress: CHF has historically appreciated during risk-off episodes in academic and policy research.¹ ³

Another nuance

CHF is a smaller market than USD. That can amplify moves when inflows surge, and it is one reason policymakers have sometimes had to react to strong CHF episodes.

Quick snapshot: why these currencies get “safe-haven” labels

(Concepts supported by empirical research on risk-off currency behavior.¹ ³)

When safe-haven behavior can break

Even safe-haven narratives can fail in certain situations, for example:

• When rate differentials dominate: High yield gaps can outweigh “haven” demand in calmer markets.

• When policy expectations shift fast: Surprises from central banks can overwhelm the risk-off story.

• When the stress is local: A region-specific shock may strengthen one haven and weaken another.

The takeaway: safe-haven labels describe tendencies, not guarantees.

What businesses can do with this information

If you are running an SME finance function, the biggest risk is often not volatility itself. It is volatility landing on the wrong day, between quote and settlement.

Here are practical ways teams reduce exposure without overcomplicating the process:

1) Separate “committed” vs “forecast” FX

• Committed: Signed POs, invoices due, payroll dates, contracted revenue.

• Forecast: Pipeline and expected volume.

Many teams hedge a higher portion of committed exposure and keep forecast exposure more flexible.

2) Match hedge timing to cash timing

If you pay suppliers in JPY or CHF, align coverage to the actual payment dates, not the month-end close.

3) Reduce “operational FX surprises”

Common fixes include:

• Holding core balances in a multi-currency account

• Scheduling payouts to suppliers

• Locking known payables with forwards

• Using international payments built for repeatability

FAQ

Are JPY, CHF, and USD always safe havens?

No. Research shows recurring patterns in risk-off episodes, but outcomes vary by scenario, policy expectations, and interest rate regimes.¹ ³

Should my business “switch” cash into safe-haven currencies?

That can become speculative quickly. Many businesses focus instead on aligning currency holdings and hedges with real payables and receivables.

What is the safest approach for SMEs?

Usually: build a simple FX policy, hedge the knowns, and reduce operational friction (approvals, scheduling, and clear payment timing).

Conclusion

JPY, CHF, and USD are called safe havens because they have often strengthened in risk-off conditions, supported by liquidity, market structure, and investor behavior.¹ ² ³ The more useful takeaway for businesses is not prediction. It is preparation.

How Xe helps

Xe Business supports teams managing international payables and FX exposure with:

• International payments

• Multi-currency accounts

• Forwards and risk tools

• Scheduled payments and streamlined workflows

Create a free business account
Speak to an FX specialist

The content within this blog post is for informational purposes only and is not intended to constitute financial, legal, or tax advice. All figures and data are based on publicly available sources at the time of writing and are subject to change. Actual conditions may vary depending on location, timing, and personal circumstances. We recommend consulting official government resources or a licensed professional for the most up-to-date and personalized guidance.

Citations

¹ The Behavior of Currencies During Risk-Off Episodes (Journal of International Money and Finance) — (2015)
² BIS Triennial Central Bank Survey 2022 (FX turnover, USD dominance) — (2022)
³ Risk, Surprises And Safe-Haven Currencies (CEPR VoxEU column citing IMF and academic work) — (2016)
⁴ IMF COFER Data (Reserve composition context) — (n.d.)
⁵ The Curious Case of the Yen as a Safe Haven Currency (IMF Working Paper) — (2013)
⁶ SNB Speech: “Maintaining price stability in a small open economy with a safe-haven currency” — (2024)

Information from these sources was taken on December 23, 2025.