Many of these investors arrive motivated by lifestyle, security and tax advantages, but most have no experience in foreign exchange operations. This detail may seem technical, but it is decisive. The exchange rate of the dollar against the euro directly influences purchasing capacity and can dictate the success or failure of a transaction.

A weak dollar means that each euro becomes more expensive for those who invest from the United States. Properties that at the beginning of the process seemed affordable may, at the time of the deed, prove to be financially unviable. The immediate consequence is withdrawals, contract cancellations and instability for developers and real estate agents. This creates risks for the entire sector, especially if the dependence on buyers from a single market increases.

The causes of this volatility are strongly linked to US monetary policy. The U.S. economy shows signs of slowing, aggravated by trade tariffs and international tensions. The Federal Reserve has signaled interest rate cuts, which tends to further weaken the dollar against the euro. At the same time, U.S. banks make it difficult to transfer capital abroad, seeking to protect their own liquidity. These restrictions further complicate the lives of those who want to invest in real estate outside the country.

Exchange rate instability does not only affect individual investors. For the Portuguese real estate sector, it represents a structural vulnerability. If demand from the United States declines due to a weak dollar, capital inflows could lose momentum, reducing the dynamism that has marked recent years. Over-reliance on an external market increases the risk of sudden shocks and forces operators to rethink strategies.

There are, however, ways to manage this risk. Investors and companies can use financial instruments such as forward contracts, which allow them to fix the exchange rate and give predictability to operations. More than that, it is essential to adopt a clear strategy: identify risk exposure, set limits, monitor results, and adjust positions whenever necessary.

Ignoring the exchange rate or relying only on luck can compromise profit margins and jeopardize long-term investments. The lesson is simple: Portugal is not isolated from the monetary policies of the United States. The impact of a weak dollar crosses borders and can condition both the profitability of investors and the solidity of a sector that has become vital to the national economy.


Author

Paulo Lopes is a multi-talent Portuguese citizen who made his Master of Economics in Switzerland and studied law at Lusófona in Lisbon - CEO of Casaiberia in Lisbon and Algarve.

Paulo Lopes