Global Currency Investing for Beginners Using the Buy & Hold Strategy

In 2024, many currency pairs fell to unexpected lows amid a strong U.S. dollar, with the euro dropping to near parity. This movement highlighted America's economic strength against a backdrop of sluggish eurozone growth and subdued economic activity in China. Further fueling the dollar's rally was President Trump’s return to the White House, which brought renewed optimism about the U.S. economy and anticipation of proposed tariffs.

Based on data from TradingView, the performance of major currencies against the U.S. dollar in 2024 reveals significant trends. Among the top-performing currencies, the British pound fell by only 1.7%, supported by a resilient UK economy. Expectations around UK and U.S. interest rates moved largely in tandem throughout the year, limiting significant divergences between the two currencies. Bond yields, which typically influence demand for currencies with similar risk and return profiles, played a key role in this stability.

On the other hand, the Canadian dollar weakened considerably, reaching a multi-year low of $0.69 USD in December. This decline was largely driven by looming tariffs. As one of America’s largest trading partners, Canada has been particularly vulnerable to the potential imposition of a 25% tariff on exports, with energy commodities forming the backbone of Canada’s trade surplus.

Meanwhile, the Brazilian real emerged as one of the worst-performing major currencies, plunging to historic lows against the U.S. dollar. Investor concerns over a rapidly widening government deficit and persistently high inflation have put immense pressure on the real. The currency is expected to remain under strain due to unsustainable public debt and tight credit conditions. In response, the Brazilian central bank raised interest rates to 12.25% in December to control inflation. Some forecasts suggest rates could climb to 14.25% by March, marking an eight-year high.

Why 2025 Might Be a Strategic Year for Investing in Currency Pairs and Exotic Currencies Using the Buy-and-Hold Method

The global currency landscape in 2025 presents a unique opportunity for investors to capitalize on forex markets, particularly with a buy-and-hold strategy. Many currencies are undervalued after a turbulent 2024, driven by significant currency volatility, geopolitical shifts, tariff concerns, and diverging monetary policies. This environment creates an ideal entry point for long-term investors looking to capitalize on potential rebounds or steady growth in specific currency pairs and exotic currencies.

1. U.S. Dollar Peak and Potential Corrections

The U.S. dollar surged in 2024 due to a combination of domestic economic strength, rising interest rates, and renewed investor confidence following political changes. However, currencies tend to move in cycles, and the dollar's peak might signal an eventual correction or stabilization. As other economies, particularly in Europe, Asia, and South America, begin to recover or implement structural reforms, their currencies could gain strength against the dollar, offering substantial returns for investors who buy now while valuations remain low.

1. Interest Rate Differentials

Major central banks, including the U.S. Federal Reserve and the Bank of England, are expected to maintain relatively high interest rates in 2025. Still, emerging and frontier markets may offer even more attractive yields. Exotic currencies—those from smaller or less liquid markets such as the Brazilian Real (BRL), South African Rand (ZAR), or Indonesian Rupiah (IDR)—often offer higher interest rates to attract foreign investment. These higher yields can generate significant carry trade opportunities for buy-and-hold investors, where investors earn interest on holding higher-yielding currencies.

1. Geopolitical and Economic Reforms

Several emerging markets are undergoing critical economic reforms to improve fiscal responsibility, boost investor confidence, and stabilize their currencies. Countries like Brazil, Mexico, and parts of Southeast Asia are expected to implement structural changes that could lead to long-term currency appreciation. Early entry into these currencies while depressed valuations could offer substantial long-term rewards.

1. Diversification Benefits

Investing in exotic currencies allows investors to diversify their portfolios beyond traditional asset classes like equities and bonds. Currency pairs and exotic currencies often have low correlation with traditional financial markets, offering a hedge against regional or global economic downturns.

1. Technological and Infrastructural Growth in Emerging Markets

Technological adoption and infrastructural growth in emerging markets are fueling productivity and economic expansion. As these economies become more integrated into global trade and investment flows, their currencies are likely to strengthen over time.

1. Rising Demand for Commodities and Natural Resources

Many exotic currencies belong to countries heavily reliant on commodity exports, such as oil, minerals, or agricultural products. With global demand for these resources expected to rise, currencies tied to resource-rich nations are poised to benefit from higher export revenues and improved fiscal balances.

The Buy-and-Hold Advantage in Forex

While forex trading is traditionally associated with short-term strategies, the buy-and-hold approach in 2025 offers compelling advantages. By identifying undervalued currencies with strong economic fundamentals and holding them through periods of volatility, investors can benefit from both capital appreciation and interest income. Moreover, the long-term strategy mitigates the stress of daily market fluctuations and reduces the transactional costs associated with frequent trading.

In summary, 2025 presents an opportune moment for investors to enter the forex market with a buy-and-hold strategy, particularly in undervalued currency pairs and exotic currencies. With geopolitical stabilization, monetary policy adjustments, and economic reforms on the horizon, the potential for long-term gains in the forex market is substantial for patient and strategic investors.

Best Places to Purchase Currencies for a Buy-and-Hold Strategy in 2025

Best for: Accessibility, Variety, and Tools for Analysis

Online brokers are the most popular choice for forex trading due to their accessibility, range of currency pairs (including exotic ones), and user-friendly platforms.

Top Recommended Brokers:

• IG Group: Known for transparency, a wide range of currencies, and advanced trading tools.
• OANDA: Offers competitive spreads, historical data analysis, and robust charting tools.
• eToro: Suitable for beginners and social trading; allows copying successful traders.
• Interactive Brokers: Ideal for institutional-level traders with access to global forex markets.
• Plus500: User-friendly interface with advanced risk management tools.

Pros:

• Access to major and exotic currency pairs.
• Research tools and market insights.
• Competitive spreads.

Cons:

• Potential overnight holding fees.
• Some platforms may not offer interest on held currencies.

Best for: Safety and Long-Term Holding

Major banks offer forex accounts and often provide currency investment products like foreign currency fixed deposits or savings accounts.

Top Global Banks for Forex Investments:

• HSBC: Strong international presence, ideal for currency accounts in multiple regions.
• CitiBank: Offers multi-currency accounts and forex investment options.
• JPMorgan Chase: Provides forex trading services to high-net-worth individuals.
• Deutsche Bank: Known for forex market expertise and tailored solutions.

Pros:

• Highly secure storage of funds.
• Multi-currency accounts are available.
• Access to expert financial advisors.

Cons:

• Higher fees and spreads.
• Limited access to exotic currencies in some cases.

Best for: Passive Investors Seeking to Hold Currencies Long-Term

Multi-currency accounts allow you to hold multiple currencies in a single account, making it easier to manage diverse forex investments.

Best Providers:

• Wise (formerly TransferWise): Offers multi-currency accounts with low fees.
• Revolut: Supports over 30 currencies with easy conversion options.
• N26: A mobile bank offering multi-currency accounts.
• Saxo Bank: Provides advanced forex trading and holding options.

Pros:

• Low conversion fees.
• Easy to transfer funds between currencies.
• Suitable for buy-and-hold strategies.

Cons:

• Limited investment features compared to dedicated forex platforms.
• Currency options might not include all exotic pairs.

Best for: Passive Investors and Diversified Currency Exposure

Exchange-traded funds (ETFs) and managed forex funds allow investors to gain exposure to currency markets without directly trading individual pairs.

Popular Forex ETFs:

• Invesco DB US Dollar Index Bullish Fund (UUP)
• WisdomTree Emerging Currency Strategy Fund (CEW)
• ProShares UltraShort Euro (EUO)

Pros:

• Managed by financial professionals.
• Diversified exposure to multiple currencies.
• Lower risk compared to individual currency pair trading.

Cons:

• Limited flexibility in choosing specific currency pairs.
• Management fees apply.

Best for: Tech-Savvy Investors Exploring Digital Currency Trends

Some cryptocurrency platforms allow trading forex-related digital assets, including stablecoins pegged to specific fiat currencies.

Top Platforms:

• Binance: Offers fiat-backed stablecoins like USDT, EURT, and more.
• Kraken: Provides forex pairs alongside digital assets.
• Crypto.com: Supports multi-currency wallets with forex integration.

Pros:

• 24/7 trading access.
• Cross-trading between forex and crypto assets.
• Lower fees for large trades.

Cons:

• Higher volatility risk in digital currencies.
• Limited access to exotic currency pairs.

Best for: Ultra-Long-Term Investors Seeking Stability

Some central banks offer government bonds denominated in local currencies. This allows investors to hold a currency while earning interest.

How to Invest:

• Purchase bonds directly via government treasury platforms.
• Use bond funds focused on foreign currencies.

Pros:

• Government-backed security.
• Steady interest income.
• Long-term capital appreciation.

Cons:

• Less liquid than forex platforms.
• Complex access procedures for international investors.

Percentage Allocation Management Module (PAMM) and Multi-Account Manager (MAM) accounts allow professional traders to manage your forex investments for a percentage fee.

Top Platforms Offering Managed Accounts:

• Alpari: Offers PAMM account solutions.
• FXOpen: Reliable PAMM services.
• AvaTrade: Supports automated managed accounts.

Pros:

• Professional management.
• Transparent profit-sharing model.
• Hands-off investment approach.

Cons:

• Performance depends on the skill of the account manager.
• Management and profit-sharing fees.

Conclusion: Diversify Your Access Points

• For Active Trading: Use platforms like IG Group or OANDA.
• For Long-Term Holding: Consider multi-currency accounts or traditional banks.
• For Passive Exposure: Explore ETFs or managed forex accounts.
• For Innovative Investors: Look into crypto exchanges offering forex pairs.

In 2025, combining multiple avenues for currency exposure—such as holding long-term through multi-currency accounts while actively trading select pairs on forex platforms—can maximize both returns and risk diversification. The key lies in identifying undervalued currencies, managing exposure wisely, and being patient with your buy-and-hold strategy.