Swiss franc: The folly trade

The Swiss franc used to be a safe haven. Nowadays it serves a different purpose. The Swiss currency provides a cheap source of funding for carry traders of all stripes, who borrow cheaply in Zurich and place the money elsewhere at higher yields. As Switzerland’s top central banker observed this week, that has produced an odd result. Countries with the lowest rates of inflation are seeing their currencies depreciate even as their competitiveness increases owing to low inflation. The Swiss econom...