A new trend in global currency asset diversification, starting with euro exchange

Why Are Foreign Currency Assets Gaining Attention Now?

As of November 2025, the global financial markets are evolving within a complex environment. Although the delay in major economic indicator releases due to the U.S. federal government shutdown has impacted the timing, inflationary slowdown persists, and countries are gradually easing their monetary policies. In this context, foreign currency assets are evolving from simply holding dollars to a diversified asset strategy that leverages currency value fluctuations across multiple currencies.

Especially as currency flows differ among countries, the strategic value of multi-currency portfolios, including euro exchanges, is increasing. As exchange rate volatility widens and interest rate policies in the U.S., Europe, and Japan follow different paths, foreign currency assets have become part of a portfolio strategy linked to the global interest rate cycle.

Three Approaches to Foreign Currency Investment

Foreign currency asset management can be categorized into three strategies based on investor preferences. Each approach balances stability, profitability, and agility differently.

Conservative Approach: Foreign Currency Deposits and Multi-Currency Strategies

The simplest and safest method is to directly purchase currencies such as dollars, euros, and yen through banks and keep them as deposits. In this case, profits come more from interest rate differentials than from exchange rate gains.

As of November 2025, the U.S. dollar deposit interest rate is around 2.7% to 3.3% annually, euro deposit rates are about 0.4%, and yen rates are nearly 0%. When mobile currency exchange offers up to 90% preferential benefits, exchange costs are significantly reduced. This approach is suitable for conservative investors or individuals with overseas spending needs.

Particularly, multi-currency deposits hold several currencies simultaneously, so diversifying into dollars, euros, and yen at certain ratios can buffer against sharp fluctuations in any single currency.

Moderate Approach: Indirect Investment via ETFs and ETNs

Using ETFs or ETNs allows for indirect investment that reflects not only exchange rate movements but also interest rate and bond price changes. Examples include dollar index ETFs, euro-related bond ETFs, and global currency ETFs.

By November 2025, the global ETF market has reached approximately $17 trillion, hitting a record high, with net inflows into dollar and euro ETFs expanding. Expectations of U.S. rate cuts and adjustments in risk assets have led to about a 3% return for dollar index ETFs and 8% for euro index ETFs since the beginning of the year. This indicates that foreign exchange markets are becoming part of macroeconomic portfolio management beyond simple currency gains.

The main advantages of ETFs are diversification and high liquidity. Investing in major global currency basket ETFs exposes investors to exchange rate fluctuations without directly betting on individual currencies. However, management fees and hedging costs can reduce net returns, which should be considered.

Aggressive Approach: FX Margin Trading and Derivatives

FX margin trading involves using small margin deposits to leverage and invest in currency pair fluctuations. For example, if USD/JPY rises from 153 to 155 yen, a $100,000 position could yield about 1.3% profit. Conversely, the same movement in the opposite direction results in equivalent losses, so rigorous risk management is essential.

Global CFD trading volume is increasing annually, with a growing proportion of retail investors in Europe and Australia. In the U.S., individual FX trading is restricted, and transactions are only legal through authorized brokers such as ASIC(Australia), FCA(UK), MAS(Singapore). When using CFDs, it is crucial to verify leverage limits, margin regulations, and licensing status.

Comparison of the Three Foreign Currency Asset Management Strategies

Understanding Currency Characteristics

By 2025, the global currency markets are moving within three main groups amid expectations of rate cuts, easing geopolitical tensions, and commodity price fluctuations.

Safe-Haven Currencies

The US dollar(USD), Swiss franc(CHF), and Japanese yen(JPY) tend to appreciate during times of increased risk such as global economic uncertainty, war, or financial crises.

Since November, market volatility has eased following the Trump administration’s inauguration, significantly reducing dollar volatility and returning to a low-volatility phase. The dollar index(DXY) remains stable around 100, and USD/JPY trades in the early 150 yen range. The Bank of Japan(BOJ) is open to normalizing interest rates in the first half of next year, leaving room for a gradual yen rebound.

Commodity-Linked Currencies

Australian dollar(AUD), Canadian dollar(CAD), and New Zealand dollar(NZD) are closely linked to commodity prices such as oil, natural gas, copper, and iron ore.

In early November, Brent crude was at $64 per barrel, and copper rose about 4% from the previous month, reflecting a recovery in commodity markets. Consequently, the Australian dollar rebounded to around 0.65 USD, and the Canadian dollar strengthened to about 1.40 CAD/USD amid rising oil prices. China’s government stimulus measures and increased commodity imports support this trend.

High-Yield Emerging Market Currencies

Brazilian real(BRL), Mexican peso(MXN), and Indian rupee(INR) benefit from higher interest rates and growth rates, making them prime targets for carry trades.

Recent inflation slowdown in emerging markets and faster rate cuts compared to developed countries have increased their attractiveness. The Mexican peso has gained about 5% since the start of the year, and the Indian rupee remains relatively stable with ongoing capital inflows. Southeast Asian currencies(Malaysia, Indonesia, etc.) also see net foreign inflows, strengthening local bonds and currencies.

Current Currency Selection Strategy

As of November 2025, the foreign exchange market remains predominantly dollar-centric with a defensive stance. The Fed has slowed its easing pace after rate cuts in September, amid geopolitical risks and economic slowdown concerns, boosting safe-haven demand. The dollar continues to reaffirm its status as a reserve currency during crises.

Meanwhile, euro(EUR) demand is limited due to growth slowdown and recession risks. Europe faces sluggish manufacturing in Germany and France, along with ongoing fiscal burdens, leading the ECB to adopt a cautious stance on further easing. The euro remains within a short-term range.

The Australian dollar faces rising inflation risks. The RBA(RBA) has stated that service prices are slowing more slowly than expected and that no rate cuts are planned this year, with markets expecting easing only in 2026. AUD/USD fluctuates within a limited range around 0.66.

The practical approach now is to build a portfolio centered on the dollar, using euro exchanges and yen as supplementary diversification tools. Resource currencies should be limited to short-term trading, with a long-term dollar-focused holding strategy considered the most stable.

Key Factors Influencing Exchange Rates

Exchange rates are not merely a result of supply and demand but are determined by complex interactions among monetary policies, fiscal health, trade flows, and geopolitics.

( Impact of Inflation and Interest Rate Differentials

U.S. November consumer inflation expectations rose to 4.7%, indicating inflation concerns persist. The Fed cut the base rate to 4.00% but signaled cautiousness about further reductions.

In contrast, the RBA has explicitly stated no rate cuts this year due to ongoing inflation pressures, and the ECB has kept rates steady, citing limited inflation slowdown. The interest rate gaps among countries are key drivers maintaining dollar strength, euro stability, and yen weakness in the current forex market.

) Fiscal Health and Debt Levels

The U.S. fiscal deficit remains around 6% of GDP, with concerns over a federal shutdown increasing market uncertainty. Conversely, major European countries are tightening fiscal discipline and gradually reducing debt ratios, leading to a short-term preference for dollar assets and medium-term diversification into euro assets.

Trade Balance and Geopolitical Uncertainty

While instability in the Middle East and uncertainties in U.S.-China trade persist, China’s export recovery and supply chain reorganization toward India and Vietnam support Asian currencies. The slowdown in commodity price declines also limits short-term rebounds of resource currencies.

Practical Guide for Beginner Investors

( Clear Goal Setting

Foreign currency investments should focus on long-term asset diversification rather than short-term gains. Setting specific, sustainable goals like “maintain 20% foreign currency exposure for 3 years” is the first step toward success.

) Tailored Investment Tools

Options include deposits, ETFs, FX margin trading, etc. For short-term liquidity, foreign currency deposits are effective; for medium-term diversification, ETFs; for short-term trading, CFDs.

Hidden Cost Calculation

Always consider fees, spreads, rollover interest, and other hidden costs. These can significantly impact long-term returns.

Risk Management with Small Capital

Start with small amounts, such as within $1,000, to familiarize yourself with market movements. Set loss limits and trade based on principles rather than emotions.

Record-Keeping and Tax Management

Keep detailed records of transactions and exchange rates, and verify tax obligations on gains beforehand. Systematic record-keeping is essential for future performance analysis.

Principles to Remember When Investing in Foreign Currency

Invest Only After Sufficient Understanding

CFD and overseas futures are complex and highly leveraged; only proceed after thorough understanding. Avoid products you do not understand.

Use Official Licensed Brokers

Trade through licensed brokers such as ASIC###Australia###, FCA###UK###, MAS###Singapore### to ensure fund safety.

Practice Currency Diversification

Distribute investments across 3-4 currencies such as dollars, euros, yen, and resource currencies to effectively reduce risk.

( Pre-Set Stop-Loss and Take-Profit

Define target profit and loss limits before trading to prevent emotional decisions. Automated trading systems can help.

) Comply with Regulations and Tax Laws

Using unlicensed overseas sites may violate AML###Anti-Money Laundering### laws. Always use official channels.

Accurately Understand Operating Costs

Spreads, currency exchange fees, and interest differentials directly impact long-term profitability. Calculate these precisely before trading.

Thorough Platform and Fund Management

Use official platforms with smooth deposit/withdrawal processes, and manage funds in your own name to ensure security.

Foreign Currency Investment Strategies in 2025

As of November 2025, foreign currency investments have shifted from simple exchange gains to a core asset strategy aligned with global interest rate cycles and inflation trends. The combination of U.S. rate cuts, dollar strength, delayed easing in Europe and Australia, and recovery in emerging markets has accentuated currency-specific differences.

The most important principle now is not precise prediction but rational diversification. Maintain a defensive dollar-centric portfolio, include euro exchanges, and balance allocations among yen and resource currencies, viewing exchange rates and interest rates from a long-term perspective.

Above all, risk management, diligent record-keeping, and adherence to regulations are fundamental principles for stable foreign currency investing. When these three elements are combined, meaningful long-term asset growth becomes achievable.