Reasons to start foreign exchange investment in 2025 now

The Value of Forex Investment Amid Global Market Volatility

Since November, the global financial markets have been experiencing rapid changes. The Federal Reserve’s stance on interest rate cuts, diverging monetary policies among countries, and fluctuations in commodity prices are all contributing to renewed interest in forex trading.

Forex investment is not just about holding dollars; it involves leveraging the value fluctuations of multiple currencies to diversify assets and generate returns. As of 2025, the global forex market exceeds a daily trading volume of 9 trillion dollars, confirming its status as the world’s largest financial market.

Forex Investment vs FX Trading, What’s the Difference?

This is a common point of confusion.

FX trading focuses on real-time, short-term trading, utilizing high leverage to seek quick profits. In contrast, forex investment is a long-term strategy aimed at diversification and hedging. As currency volatility re-expands, choosing between these approaches has become increasingly important.

Forex investment is evolving into a portfolio strategy to hedge against inflation and respond to global interest rate cycles.

How Can You Profit from Forex Investment? Three Methods

Step 1: Conservative Approach - Starting with Foreign Currency Deposits

The simplest and most solid approach. By directly purchasing dollars, euros, yen, etc., through banks and holding them as deposits, you can earn from interest rate differentials.

Current interest rates:

• US dollar: 2.7% to 3.3% annually
• Euro: around 0.4%
• Yen: near 0%

Mobile currency exchange offers up to 90% preferential benefits, significantly reducing exchange costs. Ideal for beginner investors or those with overseas spending needs.

By diversifying into multi-currency deposits with a set ratio of dollars, euros, and yen, you can also buffer against sharp fluctuations in specific currencies.

Step 2: Moderate Approach - Diversifying with Foreign Currency ETFs and ETNs

Invest indirectly in currency fluctuations via ETFs or ETNs. Dollar Index ETF(DXY), euro bond ETFs, and global currency ETFs reflect not only exchange rates but also interest rate and bond price changes.

By 2025, the global ETF market size is approximately 17 trillion dollars, reaching a record high.

• Dollar index ETF: about 3% return since the start of the year
• Euro index ETF: about 8% return

This demonstrates that the forex market is becoming part of macroeconomic portfolios beyond simple exchange gains.

The biggest advantage of ETFs is diversification and liquidity. You can invest in ETFs that track a basket of major global currencies without directly betting on individual currencies, naturally exposing you to exchange rate movements.

Step 3: Aggressive Approach - Increasing Profits with FX Margin Trading

Using small margin deposits, you can leverage high multiples to trade on currency pair fluctuations. For example, if USD/JPY rises from 153 yen to 155 yen, a 100,000 dollar position could yield about 1.3% profit.

However, if the exchange rate moves against you, losses of the same proportion occur, so thorough risk management is essential. Global CFD trading volume continues to grow steadily each year, especially with increasing retail participation in Europe and Australia.

Regulatory compliance is crucial. Only trade through officially licensed brokers such as ASIC(Australia), FCA(UK), MAS(Singapore), etc.

Quick Comparison of the Three Forex Investment Methods

Four Reasons to Start Forex Investment Now

Low Entry Barrier

Foreign currency deposits at commercial banks start from about 1,400 KRW per 1 USD. Forex ETFs via securities firms also allow small, diversified investments, making it accessible for beginners.

( Hedge Against Currency Risk

When the won depreciates, foreign currencies naturally serve as a hedge. For those traveling abroad, studying overseas, or involved in import businesses with high dollar expenses, it provides a practical way to manage currency risk.

) Transparent Market Structure

Since forex trading occurs through global financial institutions, the risk of price distortion is low. Central bank policy announcements and interest rate decisions are reflected in real-time, creating a fair and information-symmetric environment.

24-Hour Trading

The Asian, European, and US sessions follow sequentially, operating 24 hours on weekdays. You can respond immediately to exchange rate movements via mobile apps or online platforms anytime.

Understanding Key Characteristics of Major Currencies

Safe Asset Currencies: US dollar, Japanese yen, Swiss franc

The US dollar###USD### and Japanese yen(JPY) tend to appreciate during global economic uncertainty or financial crises.

• Dollar Index(DXY): stable around 100
• USD/JPY exchange rate: fluctuates around the early 150s
• The Bank of Japan is open to normalizing interest rates in the first half of next year, allowing for a gradual yen rebound

( Commodity-Linked Currencies: Australian dollar, Canadian dollar, New Zealand dollar

These currencies are linked to commodity prices such as oil, natural gas, copper, and iron ore.

• Brent crude oil: around 64 dollars per barrel in early November
• Copper prices: up about 4% from the previous month
• Australian dollar: rebounded to around 0.65 USD
• Canadian dollar: strong at around 1.40 CAD/USD

China’s economic stimulus measures and increased commodity imports support this trend.

) High-Yield Currencies: Emerging Market Currencies

Brazilian real###BRL###, Mexican peso(MXN), Indian rupee(INR) are major targets for carry trade due to high interest rates and growth.

• Mexican peso: up about 5% since the start of the year
• Indian rupee: relatively stable
• Southeast Asian currencies: continuous foreign capital inflows

Which Currencies Should You Buy Now?

As of November, the forex market remains defensive, centered on the dollar. The Fed is moderating its rate cut pace, and global geopolitical risks and economic slowdown concerns are boosting safe-haven assets.

Practical portfolio strategy:

Build a portfolio mainly around the dollar, using euro and yen as supplementary diversification tools. Resource currencies should be limited to short-term trading, with a long-term dollar-focused holding strategy being the most stable choice.

Key Factors Influencing Exchange Rate Fluctuations

( Inflation and Interest Rate Differentials

• US consumer expected inflation: 4.7%
• Fed policy rate: 4.00% )Cautious about further cuts before inflation targets are met###
• RBA: no rate cuts planned this year
• ECB: interest rates held steady

Differences in interest rates among countries are the main drivers behind the current dollar strength, euro stability, and yen and resource currency weakness.

( Fiscal and Debt Stability

• US fiscal deficit: around 6% of GDP
• Major European countries: strengthening fiscal discipline, gradually reducing debt ratios

) Trade Balance and Geopolitics

While Middle East instability and US–China trade uncertainties remain, China’s export recovery and reorganization of Asian supply chains are supporting Asian currencies.

Beginner’s Guide to Forex Trading

Step 1: Set Clear Goals

Establish specific, sustainable goals such as “maintain 20% foreign currency ratio for 3 years,” rather than short-term profit targets.

Step 2: Choose Investment Instruments

• Short-term liquidity: foreign currency deposits
• Medium-term diversification: foreign currency ETFs
• Short-term trading: FX margin trading

Step 3: Calculate Hidden Costs

Always consider all costs, including fees, spreads, and rollover interest. These significantly impact long-term returns.

Step 4: Start Small

Begin with small amounts, such as within 1,000 dollars, to familiarize yourself with market movements. Set loss limits and trade based on principles, not emotions.

Step 5: Manage Taxes

Keep clear records of transactions and exchange rates, and verify tax obligations on exchange gains in advance.

Important Precautions for Forex Investment

• Fully understand complex products before engaging
• Use only officially licensed brokers###ASIC, FCA, MAS###
• Diversify across 3–4 currencies to minimize risk
• Set profit and loss limits before trading
• Avoid unlicensed overseas sites to prevent money laundering violations
• Be cautious of cumulative effects of spreads and currency exchange fees
• Use official platforms with smooth deposit and withdrawal processes

New Opportunities in Forex Investment in 2025

Forex investment is now recognized as a core asset strategy to respond to global interest rate cycles and inflation trends, beyond simple exchange gains.

The US’s interest rate cuts, dollar strength, delayed easing in Europe and Australia, and recovery in emerging markets are making currency differentiation more pronounced.

At this point, the key is not prediction but diversification. Maintain a defensive, dollar-centered portfolio, but also allocate resources to euro, yen, and resource currencies in a balanced manner, viewing forex investment from a long-term perspective.

Risk management, consistent record-keeping, and regulatory compliance are the pillars of stable forex investment.