1. When volatility rises and risk markets are weak, the country or region should own a large number of foreign currency assets, implying that they may sell those foreign assets and bring money back home.
2. Knowing that certain currencies have historically strengthened during times of "risk off," FX traders may buy those currencies in the expectation that they will react in the same way.

A currency is often defined as "safe" for two fundamental reasons: economic stability and investor confidence.

First, economic stability, including low inflation, robust growth, and a healthy balance of trade, provides a strong foundation. Countries with well-managed economies, like the U.S. or Switzerland, offer currencies that are less likely to experience drastic value fluctuations, making them attractive in uncertain times.

Second, investor confidence, driven by a nation’s political stability, reliable institutions, and transparent governance, plays a crucial role. When investors trust that a country will maintain its policies and that its legal and financial systems are secure, they view its currency as a safe haven, particularly during global crises or market volatility. These factors combine to enhance a currency's safety perception.