How to protect your property purchase abroad against currency risk

by admin
property purchase

MARBELLA – Buying a property abroad is an exciting venture, but it also comes with the challenge of currency risk.

Fluctuations in exchange rates between different currencies can have a significant impact on the cost of your property purchase, leading to unexpected expenses or missed opportunities. It is important to understand the effect of currency risk on property purchases and learn how to protect yourself effectively.

The Importance of Currency Risk in Property Purchases

Let’s imagine you are a resident of Sweden considering buying a house in Spain, but you are concerned about potential currency fluctuations between the Swedish Krona (SEK) and the Euro (EUR). Understanding the impact of currency risk on your property purchase and how to hedge against it is crucial.

Let’s look at an example: If you have 5,000,000 SEK today, it can buy you a house worth 444,658.07 EUR. However, if you had the same amount at the beginning of 2022, you could have purchased a house worth 487,804 EUR. That’s a significant difference of almost 10%. This highlights the importance of hedging your currency risk when dealing with property in a different currency.

Imagine you need to purchase a house in September 2023 valued at 450,000 EUR. If the exchange rate remains at the current level of 11.28 EURSEK, you would need 5,085,000 SEK to make the purchase. However, if you anticipate that the SEK will weaken against the EUR and the exchange rate actually reaches 12.00, you can clearly see the currency risk involved in property purchases.

The Cost of International Bank Transfers

Transferring SEK from Sweden to your Spanish bank through traditional channels can also incur fees of up to 2-3%, significantly increasing the overall cost of your property purchase. Fortunately, there is a way to protect yourself against currency risk.

How to Hedge Currency Risk

To limit your risk in this scenario, you can open an FX position, such as EURSEK, with Hugo Investing, which allows you to secure your position. By holding a small amount of money in a trading account at Hugo, known as ‘Margin,’ you can protect your position.

By using this strategy, you can safeguard yourself from losing too much money if the exchange rate changes. It helps maintain the value you need to purchase the house, even in the face of currency fluctuations. Hugo can assist you in protecting yourself against currency risk when buying property. The company offers not only currency hedging but also access to over 68,000 different investment instruments to meet your financial goals.

Learn Everything You Need to Know About Forex Investing

If you want to learn more about investing in currencies (Forex) and improve your investment skills, Hugo is hosting an exclusive seminar on June 20th with industry expert John J Hardy. This event starts at 5 pm and is free to attend. Learn everything you need to know about Forex investing. Whether you are an experienced trader or new to the world of Forex, this is an opportunity you don’t want to miss. Register through this link. John Hardy’s lecture at Hugo Investing is a rare chance to hear from one of the most respected voices in the financial world. Therefore, Hugo encourages all attendees to come prepared with questions for this expert.

About John Hardy

John Hardy

With nearly two decades of experience in the financial industry, John Hardy is an expert in the currency market, specializing in providing strategies based on fundamental analysis, changes in macroeconomic themes, and technical developments. Hardy’s impressive track record speaks for itself. He has received numerous accolades over the years for his work and was even named the most successful 12-month forecaster for 2015among more than 30 contributors by FX Week. His forex market column is widely read and quoted by industry professionals. Additionally, he is a regular guest and commentator on top television networks such as CNBC and Bloomberg.

Let Hugo Help You

Don’t let currency risk hinder your dream property purchase. Take control of your investments and secure your future with the help of Hugo! Hugo is a regulated broker that collaborates with Saxo Bank and provides access to three advanced trading platforms.

The Hugo team has over 60 years of combined experience in coaching and educating investors to make better investment decisions. Hugo has been successfully assisting investors in Spain for over 17 years. You are welcome to contact them or visit their office on the Golden Mile in Marbella.

Disclaimer: The product is difficult to understand, and the CNMV considers it unsuitable for retail investors due to its complexity and risk.


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