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Flights to quality and forex

A ‘flight to quality’ refers to the situation in which the investors do not easily invest their capital. You can also call this situation a type of capital flight. It can occur due to any international event that has not been settles. This makes the investors doubtful about their profits and hence they shange their liquid assets to a safe investment or ‘safe haven’. This increases the demand and in turn increases the value of the stronger currencies over the weaker currencies. Some of the examples of ‘safe haven’ are Swiss franc, gold, U.S. dollar. These are traditional safe havens when is any uncertainty on economical or political basis.