The U.S. dollar is up strongly against key currencies worldwide, creating a window of opportunity for global property buyers in certain markets.
After some six years of money printing under the guise of “quantitative easing,” near-zero interest rates, and a slumping economy, the U.S. dollar recently experienced a 12-week run of consecutive gains, and it doesn’t appear that this trend will reverse anytime soon.
As the U.S. dollar grows stronger, these exchange-rate gains translate to equal discounts on property in these markets for investors starting out with U.S. dollars.
While trying to time property purchases according to currency exchange projections is practically impossible and not recommended, the recent U.S. dollar surge presents a chance for investors from outside the market, with U.S. dollars, to catch a bargain in countries where the local currency has fallen against the U.S. dollar. One country where this is the case is Colombia.
Trading for as little as 1,842 Colombian pesos in July, the U.S. dollar reached above 2,050 this week, providing an opportunity to purchase property in Colombia at a significantly reduced rate of 9.85% less.
The U.S. dollar hasn’t made gains against all currencies, of course. For example, the U.S. dollar has exchanged for 32 Thai baht consistently all year and the exchange rate with the Hong Kong dollar remains virtually unchanged.
From July 15 to Oct. 15, the U.S. dollar made the following gains:
USD/Colombian peso: +9.85%
USD/Brazilian real: +8.15%
USD/Uruguayan peso: +6.38%
USD/Chilean peso: +5.72%
USD/Mexican peso: +3.96%
USD/Malaysian ringgit: +3.01%
Increased volatility in foreign economies and their currencies, a recovering U.S. economy, and an expected interest rate hike by the U.S. Federal Reserve will all contribute to attracting investors to the U.S. dollar in 2015. Schwab bank’s chief investment strategist Liz Ann Sonders expects the U.S. dollar to retain its world-reserve-currency status due to a lack of viable alternative options.
For news on real estate from around the world, sign up for Live and Invest Overseas’ free weekly Overseas Property Alert. Or read the free twice-weekly Offshore Living Letter and the monthly Simon Letter for useful offshore investment tips and tricks.