As markets react to President Trump’s new tariffs, investors are turning to traditional safe havens—chiefly the Japanese yen and Swiss franc. Analysts say these currencies offer the best protection against rising trade tensions and recession fears.
“The yen is likely the top choice for shielding against trade risks and a U.S. recession,” said Ebrahim Rahbari of Absolute Strategy Research. He cited its low valuation, narrowing rate differentials, and Japan’s relatively limited trade reliance. The yen has gained around 3% against the dollar since April 2.
Rahbari also highlighted the Swiss franc as a strong hedge. Matt Orton of Raymond James agreed, saying both currencies are solid buffers, though he prefers the franc due to uncertainty over Japan’s monetary policy.
Jeff Ng of Sumitomo Mitsui noted that while the yen typically performs well during global downturns, Japan's economy also faces pressure from U.S. auto tariffs, which could limit the BOJ’s rate-hiking ability.
Rahbari also suggested the Brazilian real as a more unconventional hedge, citing its attractive valuation and low exposure to global trade.
Beyond currencies, investors are also shifting into bonds, cash, and gold. U.S. 10-year Treasury yields have dropped to 3.873%, while Japan’s 10-year government bond yield fell sharply to 1.05%, the lowest since December 2024.
Gold surged to a record high following the tariff news, and while it has eased slightly, it remains elevated. Analysts expect continued gains amid geopolitical uncertainty, central bank buying, and economic slowdown fears.