The global currency war: who wins?

Photo: Aranjuez1404

A currency war has broken out across the globe, as countries compete to keep the value of their currencies down. Last week, Australia cut its interest rates, despite the interest rates already remaining low, pushing down the AUD more than a full US cent against the dollar.

"A lower exchange rate is likely to be needed to achieve balanced growth in the economy," said the RBA in a statement.

A host of other countries have taken similar measures in an attempt to make their currencies - and exports - affordable. At the same time, the European Central Bank has introduced Quantitative Easing to stimulate the economy, which, combined with concern surrounding Greece's potential exit from the eurozone, has kept the single currency in a weak state.

The USA, meanwhile, has seen its currency climb against the other devaluing denominations, boosting Americans' spending power on overseas real estate. Indeed, the UK, despite pushing back its anticipated interest rate rise, is enjoying a strong sterling against the euro, which has also improved its investment clout on the continent.

Talk is now surrounding China's possible entry into the fray, while currency exchange rates become increasingly volatile. But who is winning the war?

For house hunters, France may well be the current victor.

"The euro is hovering around a seven-year low against sterling, making property across the Eurozone cheaper," says Tamsin Roser, country specialist at FranceBuyingGuide.com.

"However, French ski homes in particular now appear great value for money, thanks to the cost of comparative homes in Switzerland suddenly rocketing to foreigners with the surge in value of the Swiss franc. Meanwhile, French mortgage rates remain at historic lows, for both residents and non-residents, with typical deals starting at just 2.2 per cent for a variable mortgage over 10 years, and 3.25 per cent for a 25-year fixed-rate mortgage."

Indeed, mortgage firm Conti have seen demand soar for French real estate, with the country accounting for almost half (46 per cent) of enquiries in the past four months, particularly for ski properties.

With the pound currently hovering around €1.33, a €200,000 home in France now costs £150,376 compared with £175,439 back in the summer of 2013 when the pound was worth just €1.14. That’s a saving of more than £25,000. Investors, full of fresh optimism, are bringing their plans forward and snapping up bargains while they can. After all, who knows what the exchange rates will be like in six or 12 months' time?