As intervention risks and rising interest rates reduce the appeal of borrowing yen, arbitrage traders are increasingly using the Swiss franc as a source of financing in the short term. According to the latest data from the US Commodity Futures Trading Commission, hedge funds increased their net short positions in the Swiss franc to a nearly two-month high for the week ending August 11. Meanwhile, they cut short positions in yen for the second week in a row. The appeal of borrowing in Swiss francs stems, on the one hand, from the Swiss interest rate being close to zero, and on the other hand, thanks to the Swiss central bank's desire to curb the appreciation of the local currency. In contrast, since Japan and the US intervened in late July to boost the yen exchange rate and increase the volatility of the yen, investors have become more cautious about arbitrage transactions funded in yen. People familiar with the matter said last week that the Japanese government supports the Bank of Japan to raise interest rates in the short term.

As intervention risks and rising interest rates reduce the appeal of borrowing yen, arbitrage traders are increasingly using the Swiss franc as a source of financing in the short term. According to the latest data from the US Commodity Futures Trading Commission, hedge funds increased their net short positions in the Swiss franc to a nearly two-month high for the week ending August 11. Meanwhile, they cut short positions in yen for the second week in a row. The appeal of borrowing in Swiss francs stems, on the one hand, from the Swiss interest rate being close to zero, and on the other hand, thanks to the Swiss central bank's desire to curb the appreciation of the local currency. In contrast, since Japan and the US intervened in late July to boost the yen exchange rate and increase the volatility of the yen, investors have become more cautious about arbitrage transactions funded in yen. People familiar with the matter said last week that the Japanese government supports the Bank of Japan to raise interest rates in the short term.