How currency swings could make (or break) your client’s 2025 property investment

This year is shaping up to be one of the most volatile years for global markets in recent memory. With Donald Trump’s return to the White House, wars ongoing in Europe and the Middle East, and central banks pursuing diverging policies, the foreign exchange (FX) market is experiencing sharp, unpredictable movements.

For anyone sending money internationally, particularly property investors, these swings create both risk and opportunity. If you’re a real estate professional supporting clients with cross-border investments, understanding the forces behind currency volatility is essential to navigating the challenges ahead – and helping clients protect their returns.

Why FX matters for international property investment

There are two key ways that FX volatility can impact overseas real estate investments:

1. The value of the transaction itself

Exchange rate fluctuations can change the cost of a purchase – or the return on a sale – dramatically, especially when there’s a delay between agreeing a price and completing the transaction.

For example, between January and April 2025, the euro strengthened from around $1.02 to $1.15, meaning a US buyer purchasing a €500,000 property in Portugal would have paid around $63,000 more in April than in January, purely due to FX movement.

2. Uncertainty around returns

Exchange rate swings can make monthly rental income unpredictable and long-term financial planning difficult. If you can’t forecast future cash flows or the value of a property in your home currency, even sound investments become risky.

With FX markets expected to remain volatile into 2026, being able to identify the key drivers and act accordingly will be vital for property investors and their advisors.

What could drive currency volatility over the coming year?

Uncertainty around central bank policy

Over the past few years, central banks have rapidly shifted from hiking rates to combat post-COVID inflation to cutting them amid a global slowdown. These swings in monetary policy have powered some of the most dramatic FX moves in recent history.

Over the coming year, the Federal Reserve’s approach will be the focus for many investors, particularly amid President Donald Trump’s fierce criticism of Fed Chair Jerome Powell.

The Fed is likely to continue cutting interest rates once it’s certain that the inflationary effects of tariffs are under control, which could see USD slide. However, there is the possibility for a more extreme outcome. If Trump sacks Powell and replaces him with someone willing to flaunt economic orthodoxy by delivering deep interest rate cuts, then the US dollar could collapse.

Meanwhile, the Bank of England (BoE) is expected to take a gradual approach to lowering rates, and the European Central Bank (ECB) appears to be close to its neutral rate. GBP could weaken when the BoE cuts, while the euro may rise if the ECB stops its easing cycle.

That said, long-term forecasts are difficult amid the current uncertainty, so property investors and professionals may need to keep a close eye on events as they unfold. This is particularly important as central bank policy can shape international real estate in profound ways beyond just currency volatility.

Tariffs and trade deals

Another key driver of volatility this year has been Trump’s upending of international trade. USD cratered following Trump’s tariff announcement, and the drama of deadlines, extensions, threats, and new agreements has driven frequent FX turbulence.

We could continue to see more ups and downs as the tariff story unfolds. The countries that manage to secure trade deals or deadline extensions could see their currencies strengthen, while nations hit with tariffs might watch their currencies weaken.

Sharp shifts in market risk appetite (investor willingness to take on risk) are also likely to impact exchange rates. Flashes of optimism could boost risk-sensitive currencies like the South African rand and the Australian and New Zealand dollars, while bouts of risk aversion could lift safe-havens such as the US dollar, Swiss franc and Japanese yen.

The US dollar’s downfall

Both of these factors could feed into the US dollar’s downfall, which has seen USD collapse almost 10% since the start of 2025 (as at 28 July). Some analysts have even speculated that Trump is intentionally devaluing the dollar to boost domestic manufacturing.

Whether intentional or not, we’re seeing signs of de-dollarisation – a slow erosion of the dollar’s dominance as a safe-haven and global reserve currency. This could have profound implications for the currency market, global real estate, and the world economy.

For instance, as USD loses its shine, global investors may turn to the euro and the yuan, boosting their value. These shifts in currency strength and capital movement could impact who your clients are and where they choose to buy. For instance, European assets may become less attractive to American buyers and Chinese investors could gain more global purchasing power.

Geopolitical instability

Geopolitical risk continues to be a major theme in 2025 and into 2026. Trump’s unpredictable foreign policy, ongoing conflict in Ukraine and Gaza, and rising US-China tensions are all potential sources of volatility in the currency market.

Hopes that Trump would quickly broker peace in the Middle East and Eastern Europe have largely faded, and it’s unclear what will happen over the next year. While we can hope for peace, there is the risk that these conflicts could drag on or even escalate. As events unfold, expect to see big shifts in market risk appetite affecting safe-haven and risk-sensitive currencies.

Meanwhile, US relations with China remain tense, and any fresh confrontation – over Taiwan, trade, or tech – could rattle markets and hit currencies across Asia.

Regional economic trends

Many of the above factors will feed into an already uncertain economic outlook, and national economic trends will affect those countries’ respective currencies.

At the time of writing, concerns are mounting in the UK and the US over slowing economies and rising debt burdens, while the Eurozone may be able to recover with interest rates now relatively low. Canada’s economy faces tough challenges, particularly amid trade tensions with the US. And resilience in China could be a boon to trading partners in the Asia-Pacific region.

Currency investors will be closely watching economic data and forecasts, and property professionals should too. Shifts in GDP, inflation, and other economic indicators can quickly ripple through FX markets and change where and when it’s smart to invest.

How to navigate currency volatility in real estate

Understanding the causes of FX risk is step one. Step two is knowing how to help clients protect themselves.

For a deep dive, check out our full guide to FX risk management in international real estate, which is packed with tips for home buyers and sellers, investors, and property professionals.

In the meantime, here are key strategies to help your clients navigate uncertainty:

Partner with an FX specialist. An experienced currency broker can offer insights, market access, and tailored solutions.
Plan purchases well in advance. Early planning helps identify risks and opportunities – and gives more time to act.
Time transfers strategically. Market timing can make a major difference in realised returns. Don’t leave it to chance.
Track local markets and macro trends. Staying informed means you’re ready to react when conditions shift.
Use FX tools like forward contracts or market orders. These instruments can lock in rates or automate trades, reducing risk and adding certainty.

FX markets are always in motion, but we are living in an era of heightened volatility. With careful planning, smart tools, and expert guidance, property professionals can help clients seize opportunities, avoid costly surprises, and navigate currency risk with confidence.

To explore how we can support your clients’ international property investments, speak to an expert at Redpin today.