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Safe haven criteria - Rabobank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 25, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Guatemala) - Analysts at Rabobank explained that there are a number of criteria for a safe haven currency.

    Key Quotes:

    "In an ideal world a safe haven would be drawn from a country’s ability to sustain both a current account and budget surplus. The country would have a strong government and a credible central bank and legal system."

    "There would also be good levels of liquidity. Very few currencies tick all of these boxes. On paper arguably the CHF is the best bet, although the determination of the SNB to turn away demand for CHF through the use of negative interest rates and threats of FX intervention has made many inventors think twice."

    "Following the bursting of the Chinese stock market this summer and the devaluation of the CNY, the CHF did not perform well. Historically both the JPY and the USD are reliable safe havens and occasionally GBP appears to benefit from safe haven demand potentially due its relatively attractive yield."
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