Swiss Franc Carry Trade Trap

• Despite attractive carry trade opportunities due to negative interest rates and a strong currency, the Swiss Franc has historically been a trap for short-sellers.
• The Swiss National Bank's interventions and the franc's persistent appreciation have led to losses for those betting against it.
• An example of this is Polish citizens taking out mortgages in Swiss Francs due to low interest rates, only to face increased debt burdens when the franc rallied against the Polish Zloty.
• The SNB's massive accumulation of reserves and ongoing currency interventions demonstrate the difficulty in weakening the franc.