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Old 12-11-2015, 10:20 AM   #1
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Currency

What are people doing regarding diversification of currencies?

Seems like a lot of turmoil in the FX market and keeping all your money in USD is a big risk. Not sure what is best market to diversify into though.
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Old 12-11-2015, 10:28 AM   #2
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As long as I'm paying for everything I need in USD, I'll stick to USD. Anything more seems like pure speculation.

If you need foreign currency for some use (like regular visits to another country) that's another matter.
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Old 12-11-2015, 10:38 AM   #3
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I do not think that any other IMF reserve currency basket currency is in better position than dollar. All of them (Pound, Yen, Euro, Yuan) have similar Central Banks "easy money" policies. I would advise PM (Gold, silver, platinum etc) but during past 2 years they are only going down and not sure where bottom is going to be. So as of now USD is best even if the Feds are going to raise only .125%
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Old 12-11-2015, 10:46 AM   #4
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I have 40% of equities in unhedged foreign index funds. I think that is enough for me.

In terms of actual currency spending to meet living expenses, it's almost entirely USD so I don't worry about it much. I might spend a little in CAD and some of my toys (cameras/lenses) also may be affected by USD exchange rates but not enough to do anything.
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Old 12-11-2015, 10:47 AM   #5
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Originally Posted by Bankerwithabrain View Post
What are people doing regarding diversification of currencies?

Seems like a lot of turmoil in the FX market and keeping all your money in USD is a big risk. Not sure what is best market to diversify into though.
I don't worry much about currency diversification since I pay most stuff in US$

Nevertheless, most of my international mutual funds are unhedged, so that give me some currency diversification.
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Old 12-11-2015, 11:15 AM   #6
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I have the S&P which is plenty of international exposure for me.
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Old 12-11-2015, 11:21 AM   #7
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Originally Posted by Bankerwithabrain View Post
keeping all your money in USD is a big risk.
I don't know why you think that. If you can explain your reasoning, perhaps we can counter that (or not, depending upon your situation).
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Old 12-11-2015, 11:28 AM   #8
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I don't know why you think that. If you can explain your reasoning, perhaps we can counter that (or not, depending upon your situation).
The main concern is that the US gets hit with a bout of hyperinflation (or at least serious inflation).

The US economy is very fragile right now - with significant debt burden, less workforce participation, aging workforce, etc...
We also live in a world where tiny changes have huge impacts due to derivatives and hedge funds.

The world is more global now. Even though we live in the US - it seems that owning a basket of currencies diversifies the risk that USD takes a significant hit and everything becomes more expensive.

I know over the last year USD has strengthened significantly - but this could turn quickly.
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Old 12-11-2015, 11:49 AM   #9
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I converted all my assets to Bitcoin in 2011. You can't trust currencies subject to national manipulation.
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Old 12-11-2015, 11:58 AM   #10
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Originally Posted by mpeirce View Post
As long as I'm paying for everything I need in USD, I'll stick to USD. Anything more seems like pure speculation.

If you need foreign currency for some use (like regular visits to another country) that's another matter.
+1

I'm sort of the buy-and-hold type, rather than chasing yield or speculating. My spending is all in USD. I do have some international funds.

Although I agree that hyperinflation is a risk, I also think everything we invest in has some risk associated with it. I'm not losing sleep over it. Maybe I should.
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Old 12-11-2015, 12:40 PM   #11
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Originally Posted by Bankerwithabrain View Post
The main concern is that the US gets hit with a bout of hyperinflation (or at least serious inflation).



The US economy is very fragile right now - with significant debt burden, less workforce participation, aging workforce, etc...

We also live in a world where tiny changes have huge impacts due to derivatives and hedge funds.



The world is more global now. Even though we live in the US - it seems that owning a basket of currencies diversifies the risk that USD takes a significant hit and everything becomes more expensive.



I know over the last year USD has strengthened significantly - but this could turn quickly.

The problem is then entire world pretty much has the same problems as the US or worse. No place to go that is safer.


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Old 12-11-2015, 01:34 PM   #12
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Originally Posted by Bankerwithabrain View Post
The main concern is that the US gets hit with a bout of hyperinflation (or at least serious inflation).

The US economy is very fragile right now - with significant debt burden, less workforce participation, aging workforce, etc...
We also live in a world where tiny changes have huge impacts due to derivatives and hedge funds.

The world is more global now. Even though we live in the US - it seems that owning a basket of currencies diversifies the risk that USD takes a significant hit and everything becomes more expensive.

I know over the last year USD has strengthened significantly - but this could turn quickly.

1) Most Americans spend most of their money in US dollars. We do import a lot from other countries.
2) What would we put money into?

Euro - With slow growth, worries about Russian intervention, Asian refugees, Greece temporarily forgotten, it hardly seems like a great place to put money into.
China yuan - Their growth is slowing, the money is leaving China, they are selling US Treasuries to try to keep the dollar-yuan somewhat stable, and just about everybody predicts their currency will go down.
British pound - Uncertainty around EU membership, and too much dependence on finance centered in London.
South America - they were doing well off the commodity boom but that seems to be over for the time being, and the big countries, Brazil, Argentina and Venezuela, all seem to be in trouble economically.

I have not thought much these; somebody else can comment on them:
Japan yen
Swiss franc
Mexico peso
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Old 12-12-2015, 08:40 PM   #13
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Gold and sliver. (I especially like silver at the current prices)
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Old 12-13-2015, 12:59 AM   #14
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Half of my holdings were in foreign equities but all in US dollar denominated etfs or depository receipts. The only foreign currency that I pay attention to is the Canadian loonies because we cross the border to buy stuff.

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Old 12-13-2015, 07:28 AM   #15
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We keep about 15 percent in foreign equities. Plus some of our equity holdings are US firms but close to half of their revenue and profit is derived from international operations.
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Old 12-13-2015, 09:09 AM   #16
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Income in USD, expenses in PEN, COL is down about 30% this year.
Stronger Dollar brings more tourists, tourists bring me more Dollars,Family can buy more $h*t, circle of life!
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Old 12-13-2015, 09:24 AM   #17
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We have, and are, avoiding travel and purchases in the US because of the strong USD and weak CAD.

No Florida, AZ, Hawaii etc. for us. We are purposely travelling to countries where our money goes the furthest. We did a great deal of US travel a few years ago when the exchange rate was favourable.

Our low CAD is great for tourism though. We are seeing an influx of US tourists to Whistler and Banff. Great to see them, hope that they all spend, spend, spend and enjoy our scenery and hospitality. Good to see them taking advantage of our low dollar.
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Old 12-13-2015, 11:04 AM   #18
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We have, and are, avoiding travel and purchases in the US because of the strong USD and weak CAD.

No Florida, AZ, Hawaii etc. for us. We are purposely travelling to countries where our money goes the furthest. We did a great deal of US travel a few years ago when the exchange rate was favourable.

Our low CAD is great for tourism though. We are seeing an influx of US tourists to Whistler and Banff. Great to see them, hope that they all spend, spend, spend and enjoy our scenery and hospitality. Good to see them taking advantage of our low dollar.
We certainly enjoyed the favorable exchange rates this year, with 12 weeks in Canada, including 2 weeks in Whistler and the month of August in Canmore (just outside of Banff).
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Old 12-13-2015, 11:27 AM   #19
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I have a big chunk of change in CDN.
Sad to see it depreciate 25%

Glad I have the rest in USD

Putting your $$$$ into some other currency is not safer than keeping it in USD
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Old 12-13-2015, 12:02 PM   #20
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We expect that our CAD will be down for at least a year, probably two or more.

So we are spending this winter in SE Asia. Next year, the plan we plan to spend the winter in South America. We were thinking of adding a SA cruise to that trip but will not do so unless we get a screaming last minute deal while we are there. Not even considering Florida or Arizona at this juncture.

What surprised us was how few Americans we met in Greece this past Sept/Oct. The Euro is reasonably good for us but it is fabulous against the USD. Yet most of the tourists we met were from France, Germany, or the UK. That coupled with depressed pricing in Greece made it the ideal vacation destination for those with USD.
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