Admittedly, I had to peek around the sources to find the answer. Go to Menu (F9) → Options → Command line settings and change the Use home dir setting to your liking. The default setting is %FARHOME%, which is far's home directory. So, for example, if you want behaviour like *nix, where cd ~ changes the directory to the current user's home directory, use %USERPROFILE%.
Disclaimer: This option being more or less undocumented, I don't know if it has any side effects.
