The war in Ukraine is having a profound impact on the currency markets. If you’re looking to buy a ski property abroad and make large overseas payments and transfers, it’s worth protecting your money against volatility.
So, how is the Ukraine war impacting currencies and could this continue over the coming months?
The pound has avoided some of the volatility experienced in mainland Europe, though it has weakened significantly against the dollar. The economic implications of the war in Ukraine could weigh on the pound over the coming weeks and months.
Data released at the end of March showed that growth has slowed in the UK’s manufacturing sector due to an increase in costs and the disruption of supply chains due to the war in Ukraine. If the war in Ukraine spells further disruption for the UK economy, this could impact sterling.
Find out how to protect your property-buying budget with Smart Currency Exchange.
The euro has been heavily impacted by the ongoing conflict in Ukraine, mainly because the war has a direct effect on the European economy. Europe is reliant on Russian gas and sanctions from the West are limiting the supply of this, with potentially long-standing implications for the continent.
Any signs of positive breakthroughs, promises from Russia to scale back troops or indications that the conflict is de-escalating are likely to strengthen the euro, whilst news of the war worsening or talks making little progress is likely to cause the euro to weaken. With news coming from Ukraine on a daily and sometimes hourly basis, the euro is likely to continue to be extremely volatile.
The US dollar is the world’s reserve currency so is often the default safe-haven choice during times of uncertainty. The dollar has, therefore, largely benefited since the beginning of the crisis. However, it is also prone to volatility, impacted by developments surrounding peace talks and sanctions.
If the markets decide that the Ukraine conflict is less of a concern, ‘risk on’, then the dollar could fall. Equally, when events in Ukraine escalate, investors opt for the safety of the dollar, causing it to strengthen.
How to protect your money
As an international property buyer, the safest way to protect your money is by using a forward contract, which locks in the same exchange rate for up to a year. If you lock this in soon, you will have the peace of mind that your money will be unaffected, whatever happens. Find out more here.
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