Flight to Quality
Flight to Quality Meaning:
In foreign exchange terminology, a flight to quality refers to the tendency of investors to seek the safest possible assets for their money during challenging economic times. By doing so, they generally move their funds out of riskier, low-quality assets and into more conservative, higher-quality assets that are generally perceived as safer investments.
In foreign exchange terminology, a flight to quality refers to the tendency of investors to seek the safest possible assets for their money during challenging economic times. By doing so, they generally move their funds out of riskier, low-quality assets and into more conservative, higher-quality assets that are generally perceived as safer investments.
A flight to quality often occurs during times of uncertainty in the financial markets and can benefit more secure and conservative assets like U.S. Treasury Bonds, in addition to safe-haven currencies like the Swiss Franc. In particular, the Swissie tends to increase in value during troubled times due to Switzerland’s generally-recognized financial stability and policy of political neutrality.