The new hierarchies of the currency market

A new hierarchy is emerging on the global currency market. Some currencies that have represented stability and protection for decades are losing some of their appeal, while others are trying to build a new geopolitical and financial role. In a context dominated by geopolitical tensions, high energy prices, divergent monetary policies and growing economic fragmentation, the very concept of "safe haven currency" is changing. "The most obvious case is that of the Swiss franc, which continues to attract capital at times of global tension," points out Stefano Gianti, analyst at SwisseQuote. In contrast, the Japanese yen has lost much of its historic defensive function".

According to many analysts, the Japanese currency still retains some technical safe haven characteristics, but it has lost the practical and psychological role it had in previous decades. In other words, the yen is no longer automatically perceived as a safe haven during global crises. 'Already since 2020, the yen has depreciated by more than 45 per cent against the US dollar, a dynamic that reflects increasingly evident structural problems in the Japanese economy,' Gianti adds. 'One of the main factors of weakness is Japan's enormous public debt, which many investors consider difficult to sustain in the long term. Added to this is an often negative trade balance since 2011, mainly due to the country's strong energy dependence. The monetary environment has further aggravated the situation. For years, the Bank of Japan has maintained an ultra-accommodating policy, with very low rates compared to the US. This has made the yen an ideal currency for carry trades, i.e. speculative strategies based on financing in cheap yen to invest in more profitable assets elsewhere'. As Gianti explains, however, at times of rising US rates or dollar strength, the yen tends to weaken rapidly.

Since 2023, the Swiss franc, on the other hand, has appreciated by about 23% against the US dollar: in 2025 alone, it recorded a gain of close to 13%, touching new highs in 2026. Whenever uncertainty increases in the markets with wars, financial crises or recessionary fears, investors tend to take refuge in the franc. 'However, the strengthening of the Swiss currency also creates problems for the Swiss economy,' explains Gianti. 'A currency that is too strong penalises exports and reduces the competitiveness of Swiss companies. That is why the Swiss National Bank is closely watching the currency's movements and could intervene directly in the market if the appreciation becomes excessive'.

The pound has historically been stronger than the euro. Its value, however, has steadily declined in recent years. The Brexit has further contributed to a weakening of the British currency. Today, in an environment where inflation expectations appear increasingly less anchored, while growth, employment and investment remain weak, in the presence of both a persistent government deficit and a current account deficit, British government bonds and sterling appear particularly vulnerable. In short, the pound seems to be suffering from a fragile policy and weak growth, which is affecting its . 'The British currency is going through a complex phase,' Gianti continued. 'The Pound Sterling/Dollar exchange rate fell to 1.34, touching its lowest levels since April 2026 even though it remains firmly above its 200-day moving average. The British currency is suffering from both global geopolitical tensions and domestic political instability'. As Gianti points out, the war in Iran and rising energy prices are creating a particularly difficult environment for the UK. Indeed, higher energy prices risk generating a new inflationary shock in an economy already characterised by weak growth and subdued consumption.

According to various experts, the Indian rupee is currently weak, to the extent that it is depreciating against the dollar and the euro. Weakness is mainly due to tensions over India's trade deficit related to high energy supply costs. "India has to increase its demand for dollars to finance energy imports, especially at a time of still high crude oil prices," emphasises Matteo Paganini, Coo of Bcm Markets. "This creates pressure on the trade deficit, which is however offset by significant capital flows, IT services and remittances from abroad, because the Indian economy remains solid and growing. We think that the Rupee, with a normalisation of the energy picture, can recover some of the accumulated weakness. Today, Indian equity in local currency can be interesting for an investor. On the other hand, bonds in local currency are more delicate, given that US Treasuries, with still attractive yields and considered the main global risk-free asset, are more suitable for those with a lower appetite for risk".