Is there a currency risk when buying a Czech property?
If you’re serious about reducing exposure to currency risk, we normally recommend setting up a forward contract with a currency risk firm. Forward contracts usually guarantee up to two years at a set exchange rate. If you want to finance your property via a mortgage, the best option would be to have the loan paid in the domestic currency (Czech crowns). By doing this, because you’ll be collecting rent in domestic currency, you can reduce exposure to any fluctuations in the exchange rate. (This is unlikely anyway – the Czech crown has been stable against foreign currencies for some time.) Note: With a forward contract, while you may be able to secure a set rate for two years, it could end up costing you more money than you save. A substantial inflow of Foreign Direct Investment over the past few years looks set to sustain long-term economic growth, meaning that the crown is likely to remain strong.
