Global currency diversification investment, start with a Korean won and Australian dollar portfolio

The international financial markets in November 2025 are sending mixed signals. Despite increasing uncertainty around the Federal Reserve( Fed)'s interest rate path, inflation is slowing down, and countries are gradually shifting their monetary policies toward easing. In this environment, the importance of holding foreign currency assets is being re-emphasized.

Foreign currency investment is not just about hoarding dollars. It involves a comprehensive strategy to hedge against the Korean won’s value fluctuations, combine high-interest-rate currencies like the Australian dollar, and utilize interest rate differentials across countries to protect assets and generate returns.

In 2025, which currencies should you watch?

The current foreign exchange market still maintains a defensive trend. The dollar reaffirms its status as a reserve currency during crises, attracting capital flows back, while the Australian dollar has limited upside potential amid high interest rate risks and inflation pressures.

Safe assets: USD, JPY, CHF(

The US dollar) USD(, Japanese yen) JPY(, and Swiss franc) CHF( tend to appreciate during global economic uncertainty or geopolitical tensions. Since November, volatility has significantly decreased, and the dollar index) DXY( has stabilized around 100. The USD/JPY exchange rate is moving in the early 150s, and the Bank of Japan) BOJ### has hinted at possible interest rate normalization in the first half of next year, leaving room for a gradual yen rebound.

( Commodity currencies: AUD, CAD) The Australian dollar( AUD) and Canadian dollar### CAD( are linked to commodity prices such as oil, natural gas, and copper. In early November, Brent crude was at $64 per barrel, and copper rose about +4% compared to the previous month, indicating a recovery in commodities. Consequently, the Australian dollar rebounded to around 0.65 USD, and the Canadian dollar strengthened to about 1.40 CAD/USD. China’s government stimulus measures and increased commodity imports support this trend.

) High-interest emerging markets: BRL, MXN, INR( Brazilian real) BRL(, Mexican peso) MXN###, and Indian rupee( INR) are primary targets for interest rate arbitrage due to their relatively high interest rates and growth rates. Slowing inflation in emerging markets and faster rate cuts compared to developed countries enhance the attractiveness of these currencies. The Mexican peso has gained about 5% since the beginning of the year, and the Indian rupee continues to attract investor inflows amid relative stability.

Three pathways for foreign currency investment

1. Conservative investors: Foreign currency deposits and multi-currency accounts

The simplest method is to directly purchase dollars, euros, or yen through banks and hold them as deposits. Returns come mainly from interest rate differentials rather than exchange rate fluctuations.

Currently, US dollar deposit rates are around 2.7–3.3% annually, euro deposits about 0.4%, and yen nearly 0%. Applying bank foreign exchange preferential rates( up to 90%) can significantly reduce currency conversion costs, making this suitable for conservative investors or those planning overseas expenses.

Holding multiple currencies simultaneously also buffers against sharp fluctuations in any single currency. Diversifying with the Korean won and Australian dollar can add an extra layer of return opportunities, especially if Korea faces economic risks.

2. Moderate investors: Foreign currency ETFs and ETNs

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

In 2025, the global ETF market has reached a record $17 trillion, with inflows into dollar and euro ETFs expanding. Since the start of the year, dollar index ETFs have gained about 3%, and euro index ETFs about 8%. This indicates that foreign exchange markets are increasingly viewed as part of macroeconomic portfolio management, beyond simple currency speculation.

The main advantages of ETFs are diversification and liquidity. You can gain exposure to major global currencies without direct bets on individual currencies by investing in a basket ETF. However, management fees and currency hedging costs can reduce net returns, so they should be considered.

3. Aggressive investors: FX margin trading( CFD·Futures)

Trade currency pairs with high leverage using small margins. For example, if USD/JPY rises from 153 to 155 yen with a $100,000 position, you could earn about 1.3% profit.

Conversely, similar movements can lead to equivalent losses, so strict risk management is essential. Global CFD trading volume is increasing annually, especially among retail investors in Europe and Australia.

In the US, individual FX trading is restricted; transactions are only legal through licensed brokers such as those authorized by ASIC, FCA, or MAS. When using CFDs, always verify leverage limits, margin rules, and licensing status.

Three key factors influencing exchange rates

( 1. Interest rate differentials and inflation

In November, US consumer expected inflation rose to 4.7%, higher than the previous month. The Fed cut the federal funds rate to 4.00% in October, but Chair Powell stated, “We will proceed cautiously with additional rate hikes until inflation clearly converges to our target.”

Meanwhile, the Reserve Bank of Australia) RBA### indicated that service inflation is easing more slowly than expected and announced no rate cuts this year. The European Central Bank### ECB( also kept rates unchanged, citing limited inflation slowdown. These interest rate differentials are key drivers behind the current dollar strength, euro stability, and the weakness of the Australian dollar and yen.

) 2. Fiscal health and debt levels

The US fiscal deficit remains around 6% of GDP, with concerns over a federal government shutdown increasing market uncertainty. In contrast, major European countries are strengthening fiscal discipline and gradually reducing debt ratios, leading to a preference for short-term dollar assets and medium-term euro asset diversification.

( 3. Trade flows and geopolitical risks

While instability in the Middle East and uncertainties in US–China trade relations persist, China’s export recovery and supply chain reorganization centered on India and Vietnam are supporting Asian currencies. Commodity price fluctuations also directly impact resource currencies like the Australian dollar and Canadian dollar.

Five common mistakes beginners should avoid

1. Exploit highly transparent market structures

The forex market is the largest financial market in the world, with daily trading volume exceeding $9 trillion. Transactions occur through global financial institutions, minimizing price distortions, and central bank policies are reflected in real-time, reducing information asymmetry. Trading in a fair and competitive environment over the long term is a major advantage.

2. Take advantage of 24-hour market flexibility

The forex market operates 24 hours on weekdays, sequentially covering Asia, Europe, and the US sessions. There’s no need to wait for fixed closing times like in stock markets, and you can adjust positions in real-time during major events like FOMC meetings or economic data releases.

3. Low entry barriers

Foreign currency deposits start from about 1 dollar) roughly 1,400 won(, and mobile currency exchange can offer up to 90% preferential rates. Investing in foreign currency ETFs via securities firms also allows small-scale diversification, lowering the entry barrier for beginners.

4. Hedging exchange risk when the Korean won weakens

In case of Korea’s economic slowdown or won depreciation, foreign currency assets like dollars or Australian dollars naturally serve as a hedge. This is especially useful for those with overseas travel, study abroad, or import expenses in dollars. The Korean won–Australian dollar combination offers additional protection due to high Australian interest rates and commodity price linkage.

5. Keep clear transaction records and tax management

Maintain detailed records of transactions and exchange rates used, and check tax obligations on capital gains in advance. Considering long-term holding and tax efficiency is crucial for overall returns.

Three mistakes to avoid

Avoid products you don’t understand

CFD and overseas futures are complex and highly leveraged; only approach after thorough understanding.

Use licensed brokers

Trade only through brokers authorized by official agencies like ASIC, FCA, or MAS. Unregulated foreign sites pose risks to your funds.

Set stop-loss and take-profit levels in advance

Predefine profit targets and loss limits to prevent emotional trading. Be aware of hidden costs like spreads, transaction fees, and interest differentials, as they directly impact long-term profitability.

Practical strategies at this moment

As of November 2025, the most realistic foreign exchange portfolio is:

Core: Dollar-focused defensive assets

Due to the Fed’s cautious pace of rate cuts and global uncertainties, the dollar remains a safe haven. Long-term, holding dollars as the main asset class is the most stable approach.

Secondary: Euro and Yen

The euro’s upside is limited by sluggish European manufacturing, while the yen shows signs of gradual recovery. Holding both currencies adds regional diversification to a dollar-centric portfolio.

Profit opportunities: Australian dollar and emerging market currencies

Trading the Australian dollar short-term is practical; aim for short-term gains with a Korean won–Australian dollar mix, but keep long-term holdings limited. Similarly, manage emerging market currencies mainly for short-term opportunities.

Why diversification is the key in 2025

Foreign currency investment in 2025 goes beyond simple exchange rate gains, serving as a core asset strategy to respond to global interest rate cycles and inflation. As the US cuts rates, the dollar remains strong, while delays in easing in Europe and Australia, along with emerging market recovery, make currency characteristics more distinct.

At this stage, the most important principle is not prediction but diversification. Use the dollar as the main axis, but balance with a mix of currencies like euro, yen, and Korean won–Australian dollar, and monitor long-term trends in exchange rates and interest rates.

Above all, risk management, consistent record-keeping, and compliance with regulations are essential for stable foreign currency investments.