Recently, I’ve been pondering a question: why are so many people starting to invest in foreign currencies? The answer is quite simple—under Taiwan’s low-interest-rate environment, investing in foreign currencies can indeed offer better profit opportunities. I’ve also been exploring this field myself and found that to truly make money, the key isn’t blindly following trends, but understanding how the market operates.

First, it’s important to clarify one thing: investing in foreign currencies essentially involves earning two things: exchange rate differences and interest rate spreads. Exchange rate difference refers to the price variation when buying and selling at different times, while interest rate spread is the difference in interest rates among countries. For example, Taiwan’s fixed deposit rate is about 2%, while the US has 5%, and that 3% gap is a potential profit. But there’s a trap to watch out for—sometimes you earn interest but lose money due to exchange rate fluctuations. This is called “earning the interest spread but losing on the exchange rate,” and it took me a few early mistakes to truly understand this principle.

Regarding specific ways to invest in foreign currencies, there are mainly three options. The first is foreign currency fixed deposits, which is the most conservative approach. You can operate by opening a foreign currency account at a bank, suitable for complete beginners. The advantage is low risk; the downside is poor liquidity. If the exchange rate moves favorably but the fixed deposit hasn’t matured yet, early withdrawal may incur interest deductions, which isn’t very cost-effective.

The second is foreign currency funds, which I think is the most suitable for most people. No binding contracts, can buy and sell anytime, and the interest usually falls between savings and fixed deposits, offering much better flexibility than fixed deposits. Common options include money market funds and currency ETFs, which can be directly invested in TWD, with the fund company handling currency exchange on your behalf.

The third is forex margin trading, which I used for a period. Its features include 24-hour trading, a T+0 mechanism, and a very low entry barrier. However, because leverage is used, the risk is relatively high. Leverage typically ranges from 50 to 200 times. It’s best to be conservative initially and avoid using too high leverage.

When it comes to choosing specific currencies for investment, Taiwanese investors most often choose USD. But I later discovered there are other good options. Foreign currencies can roughly be divided into four categories. Policy currencies like USD and EUR are mainly influenced by central bank policies. Safe-haven currencies like JPY and CHF are from politically stable, economically developed countries, with relatively low risk. Commodity currencies like AUD and CAD are tied to commodity prices, making their trends easier to grasp. Lastly, emerging market currencies usually have high interest rates but also high volatility, making them riskier.

Recently, looking at market trends, the Federal Reserve has been cutting interest rates starting from September 2025, with cumulative cuts by early 2026. This impacts currencies worldwide. The euro against the dollar has risen to a four-year high, the yen has experienced more volatility due to differing central bank policies, the pound has strengthened mainly because of a weak dollar, and the Swiss franc has appreciated due to safe-haven demand. These changes are important for currency investors to monitor closely.

To profit from currency investments, you first need to understand what factors influence exchange rate fluctuations. Countries with low inflation rates usually see their currencies appreciate, and rising interest rates can attract foreign capital. Government debt, trade conditions, and political stability also impact exchange rates. I personally keep an eye on international news sites like CNBC or Bloomberg to stay updated on market movements.

In practical operations, a few key points are: first, choose currencies you’re familiar with—avoid unfamiliar ones. Second, always watch exchange rate fluctuations carefully, as this market changes rapidly. Third, diversify your holdings—such as holding both USD fixed deposits and AUD funds to hedge risks. Fourth, learn to set stop-loss and take-profit orders, especially for short-term trading, to prevent large losses. Fifth, timing your entry is crucial—don’t chase highs or sell lows; wait for a clear trend to form before entering.

When I trade foreign currencies, I start by practicing on a demo account, testing strategies with virtual funds. Once I feel confident, I switch to real money. This greatly reduces the learning curve. Recently, I’ve also been using some platform tools—some offer analysis features that help judge market direction. Overall, investing in foreign currencies isn’t something you master overnight; it requires continuous learning, practice, and strategy adjustment to find your own rhythm in this market.