Editorial & Advertiser Disclosure Global Banking And Finance Review is an independent publisher which offers News, information, Analysis, Opinion, Press Releases, Reviews, Research reports covering various economies, industries, products, services and companies. The content available on globalbankingandfinance.com is sourced by a mixture of different methods which is not limited to content produced and supplied by various staff writers, journalists, freelancers, individuals, organizations, companies, PR agencies Sponsored Posts etc. The information available on this website is purely for educational and informational purposes only. We cannot guarantee the accuracy or applicability of any of the information provided at globalbankingandfinance.com with respect to your individual or personal circumstances. Please seek professional advice from a qualified professional before making any financial decisions. Globalbankingandfinance.com also links to various third party websites and we cannot guarantee the accuracy or applicability of the information provided by third party websites. Links from various articles on our site to third party websites are a mixture of non-sponsored links and sponsored links. Only a very small fraction of the links which point to external websites are affiliate links. Some of the links which you may click on our website may link to various products and services from our partners who may compensate us if you buy a service or product or fill a form or install an app. This will not incur additional cost to you. A very few articles on our website are sponsored posts or paid advertorials. These are marked as sponsored posts at the bottom of each post. For avoidance of any doubts and to make it easier for you to differentiate sponsored or non-sponsored articles or links, you may consider all articles on our site or all links to external websites as sponsored . Please note that some of the services or products which we talk about carry a high level of risk and may not be suitable for everyone. These may be complex services or products and we request the readers to consider this purely from an educational standpoint. The information provided on this website is general in nature. Global Banking & Finance Review expressly disclaims any liability without any limitation which may arise directly or indirectly from the use of such information.


Building upon our recent video post, which detailed Australia’s strong fiscal currency standing, it’s fair to say that all Australian investors with foreign holdings should be looking to protect themselves from any potential foreign-currency risks.

Fluctuations in the value of currencies can directly impact your investments, and these oscillations affect the associated investment risks — sometimes these risks work in your favour, other times they do not. Any international investments are great strengthening mechanisms for your portfolio, but there fluctuating exchange rates that can jeopardise an overall return. If, for example, you’ve expanded into foreign stock, bonds, goods or properties, there are a few potential solutions to downplay any negative effects.

Hedge your bets

Protect Your Finances From Any Potential Foreign-Currency Risks
Protect Your Finances From Any Potential Foreign-Currency Risks

Considering the strength of the Australian dollar, you won’t lose any money if the currency your investment is in falls, but you won’t gain anything if that currency appreciates.

There are two ways to hedging foreign assets could work in your favour: Buy a currency-hedged mutual fund, or invest in an exchange-traded fund. By doing so, you’ve navigated the risk away from your investment and only have to worry about stock market returns.

Always look for high interest rates

By purchasing the currency of a country that has a higher interest rate, or buy owning government bonds, you could enjoy a small return simply by holding certain foreign currency in a bank account. This is made more difficult for Australian citizens as countries like the USA store cash by holding the Australian dollar and making a return.

However, you should note that this kind of strategy does carry a risk. If a national interest rate drops, you can see a loss. But if another country’s rises, you have a potential opportunity to transfer money overseas and enjoy a gain. Protect your money further with a trusted transfer service from an exchange specialist like Travelex.

Invest in the currency market

Demand for foreign stock has a positive effect on the price of international currencies. The foreign exchange market is dedicated to the trade of foreign currencies and there are several ways to invest — all of which present unique opportunities and potential risks.

You can trade currencies direct, setting up your own accounts in the process, or you can look to hire the services of a professional broker. However, currency trading is more suited to those capable of handling any potential losses. In fact, investors looking for exposure to currency investments might be best served acquiring them through exchange-traded funds. Some exchange currency funds are designed to exploit the trend associated with high interest rates and can therefore provide a suitable outcome. However, you do need to factor trading fees and taxes into your budget.

Buy undervalued currency

To identify currencies that have been undervalued, start by looking at a country’s current account deficit; this is the difference between what is imported versus what is exported. If a country has a sizable discrepancy, it could be that the currency has become uncompetitive, which would then suggest that it may be overvalued and will fall.

High inflation in regard to another country can place pressure on currencies and force down competitiveness but again, the world of international currencies is a complex one and not tackled easily.