Recently, a friend asked me, "What foreign currency should I buy now?" I realized that many people still have some confusion about foreign currency investment. In fact, foreign currency investing seems complicated, but you can get started by grasping a few core concepts.

Let me share my observations first. Taiwanese people have always been interested in foreign currency investment, mainly because Taiwan's dollar interest rates have been low for a long time, while foreign currencies tend to have higher interest rates. This interest rate differential becomes an attraction. But there's a trap many people fall into—only looking at the interest rate spread without paying attention to exchange rate fluctuations. I've seen many people earn interest but lose more due to currency depreciation, which is the "profit from interest rate spread but loss from exchange rate movement" scenario.

To invest in foreign currencies, you first need to understand the difference between "foreign currency" and "forex." Foreign currency refers to currencies other than the New Taiwan Dollar, while forex is a broader concept that includes foreign currencies, foreign currency payment instruments, bonds, and other assets denominated in foreign currencies. Simply put, buying and selling foreign currencies is a form of forex trading.

Taiwanese banks generally offer 12 foreign currency investment options, including USD, AUD, CAD, HKD, GBP, CHF, JPY, EUR, and others. These currencies can be divided into four main categories, each with different characteristics. Policy currencies like USD and EUR are mainly influenced by central bank policies; safe-haven currencies like JPY and CHF are characterized by strong national stability; commodity currencies like AUD and CAD are linked to commodity prices; emerging market currencies tend to have high interest rates but also higher volatility and risk.

What foreign currency should I buy now? My suggestion for beginners is to prioritize safe-haven and commodity currencies. Safe-haven currencies perform steadily, and commodity currencies are relatively easier to understand in their trends. Combining these two is more suitable for most investors. Of course, USD is also a top choice, as it is the global settlement currency with the highest liquidity.

There are mainly three ways to invest in foreign currencies. The first is foreign currency fixed deposits, which are the simplest and lowest risk—just open an account at a bank—but liquidity is poor, and early withdrawal may incur interest penalties. The second is foreign currency funds, including money market funds and currency ETFs, which do not require lock-in periods and can be bought and sold anytime, offering interest rates between savings and fixed deposits, making them more flexible. The third is forex margin trading, which is suitable for experienced investors, using leverage to amplify gains, but also carries higher risks.

Many factors influence exchange rates. Currencies of countries with low inflation tend to appreciate; rising interest rates attract foreign capital, causing the currency to strengthen; high government debt can reduce foreign investment appeal; improved trade conditions can boost the exchange rate; political stability is also a key factor. These are all things to research before investing.

Recently, I noticed that the euro against the US dollar has been strengthening continuously, mainly because the Federal Reserve is cutting interest rates while the European Central Bank remains relatively steady. USD/JPY has been volatile due to divergence between the Bank of Japan's rate hikes and the Fed's policy. GBP/USD has strengthened this year mainly because of a weak dollar rather than an improvement in the pound itself. CHF has appreciated due to its safe-haven status.

To make money through buying and selling foreign currencies, the core principle is "buy low, sell high," but the forex market also allows "sell high, buy low," which is the advantage of two-way trading. For example, if you expect the euro to weaken against the dollar, you can sell the currency pair first and then buy it back after the euro depreciates to profit.

I recommend that beginners pay attention to a few points when investing in foreign currencies. First, avoid trading currencies you don't understand; stick to major currency pairs like USD and JPY. Second, constantly monitor exchange rate fluctuations and international news, as they directly impact investment decisions. Third, diversify your holdings across different foreign currency products to hedge risks. Fourth, always set stop-loss and take-profit orders, especially when trading on margin, to prevent margin calls. Fifth, pay attention to entry timing—avoid chasing highs or selling lows; wait for a clear trend to form before entering.

Finally, no trading strategy is effective without practice. Beginners should start with demo accounts to practice and test their trading strategies in real market conditions, assessing their risk tolerance. Foreign currency investment isn't very difficult; the key is patience in learning and making rational decisions.