US$ and other currencies - travel now

[dex]

The US$ is getting weaker vs most currencies - check out the euro at 1.37+
Forex Street. The Foreign Exchange Market

And the Fed hasn't even started to lower rates as expected. Other countries are starting to raise interest rates.

When the Fed does start to lower rates the US$ should weaker further.

Have you looked at the UK pound recently? 2.01+
I wonder what a pint of beer costs there now?


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[Andy R]

I saw the dollar drop 17% during my trips to Brazil since January 2006. Add inflation and the overall cost to live there went up nearly 25%.

The currency I find most interesting is the Norwegian Kroner. They have an amazing economy (driven by oil reserves), a small population to take care of, low corruption and huge surpluses of cash.

 

[Martha]

The Canadian dollar is close to par with the US dollar. I used to love to go to Thunder Bay, Ontario to shop for clothes. Not anymore! Pretty soon it will be Canadians shopping here instead.

 

[Andy R]

I am currently in Argentina and the Dollar is still strong here (has not lost ground over the last few years) because Argentina has been just as bad as the US with fiscal responsibility. Inflation has been out of control though. I can see prices go up on a monthly basis.

Excuse me for my ignorance but is there any kind of investment instrument that helps reduce the effects of currency exchange rates while also providing some fixed returns like a CD. I am thinking of something like a fund that has invested in what they consider to be CD in the top 5 currencies. I hope that makes sense...

 

[dex]

I am currently in Argentina and the Dollar is still strong here (has not lost ground over the last few years) because Argentina has been just as bad as the US with fiscal responsibility. Inflation has been out of control though. I can see prices go up on a monthly basis.

Excuse me for my ignorance but is there any kind of investment instrument that helps reduce the effects of currency exchange rates while also providing some fixed returns like a CD. I am thinking of something like a fund that has invested in what they consider to be CD in the top 5 currencies. I hope that makes sense...

Andy I would guess there are. I would also think that non USA banks would have them.

Check out E*trade. I think they are doing some international trading.

 

[SecondCor521]

I am currently in Argentina and the Dollar is still strong here (has not lost ground over the last few years) because Argentina has been just as bad as the US with fiscal responsibility. Inflation has been out of control though. I can see prices go up on a monthly basis.

Excuse me for my ignorance but is there any kind of investment instrument that helps reduce the effects of currency exchange rates while also providing some fixed returns like a CD. I am thinking of something like a fund that has invested in what they consider to be CD in the top 5 currencies. I hope that makes sense...

If you're just trying to hedge currency exchange rates, you in theory could buy currency swaps. I don't think they sell those to individual investors. Another possibility is just having your investments in whatever currencies you want. For example, if you're planning to return to the US soon, leave most of your money in US denominated accounts and just have a small amount in Argentinian currency.

If you want CD rates, just buy CD's, either US ones, or Argentinian ones, as the case may be after considering your currency hedging proclivities.

2Cor521

P.S. -- Thanks for being more solicitous of the board members' opinions lately. I've noticed.

 

[brewer12345]

Excuse me for my ignorance but is there any kind of investment instrument that helps reduce the effects of currency exchange rates while also providing some fixed returns like a CD. I am thinking of something like a fund that has invested in what they consider to be CD in the top 5 currencies. I hope that makes sense...

www.everbank.com should do the trick.

 

[Florida]

www.everbank.com should do the trick.

Everbank is good for CD's in the major foreign currencies.

Buying CD's in Latin American currencies may be a good idea.
Anyone know how?

 

[kumquat]

The Canadian dollar is close to par with the US dollar. I used to love to go to Thunder Bay, Ontario to shop for clothes. Not anymore! Pretty soon it will be Canadians shopping here instead.

Sorry to dissapoint (how should I spell that word?) you Martha but the Canadian & US economies have always been intertwined. Most companies are North American based and price their stuff (from) China etc. in local dollars. Being Canadian, I hate to admit that everything here other than restaurant food and motels is still more expensive than US prices.

Canadians are flocking to the US to buy cars since the manufacturers don't seem to know the exchange rates: reportonbusiness.com: globeinvestor.com - Loonie has Canucks eyeing U.S. for cars

Please come, but don't expect a bargain.

 

[JohnEyles]

Everbank is good for CD's in the major foreign currencies.

Wow 11-12% return in Iceland. What's a good source of
conventional wisdom about what currency of various countries
is doing relative to US$ ?

 

[MasterBlaster]

JohnEyles:

regarding the Iceland currency play, this thread might be enlightening...

http://www.early-retirement.org/forums/f28/everbank-icelandic-cd-8-24-a-19634.html

 

[Rich_by_the_Bay]

NPR did a piece this morning on an economist who is promoting a global currency. Says it will eliminate all the manipulative political games (e.g. China) involved with currency.

He pointed out that until Nixon unlocked the dollar from gold, this was the way it was (other than having different nominal currency names and denominations, everyone was linked to gold).

 

[JohnEyles]

JohnEyles:

regarding the Iceland currency play, this thread might be enlightening...

http://www.early-retirement.org/forums/f28/everbank-icelandic-cd-8-24-a-19634.html

Thanks for the link !

Someone there talks about a 6.7% rate on Treasury I-Bond.
That doesn't sound right.

 

[brewer12345]

It is worth noting that you can also buy bond funds that invest in non-USD government debt. BEGBX does this with a good track record. GIM is also good, but I would not buy it unless it goes to a discount to NAV. One of the ETF providers was rumored to be setting up a non-USD bond ETF, but I don't know if it ever happened.

 

[MasterBlaster]

NPR did a piece this morning on an economist who is promoting a global currency. Says it will eliminate all the manipulative political games (e.g. China) involved with currency.

He pointed out that until Nixon unlocked the dollar from gold, this was the way it was (other than having different nominal currency names and denominations, everyone was linked to gold).

here are some of the reasons why a gold standard was rejected...

1) the dollar is only as good as the government's credibility to stick with the standard. If a government can go on a gold standard, it can go off, and historically countries have done exactly that all the time. The fact that speculators know this means that any currency adhering to a gold standard (or, in more modern times, a fixed exchange rate) may be subject to a speculative attack.

2) some include the gold standard as one of the causes of the Great Depression - ...

< counting on a gold standard to enforce monetary and fiscal discipline in an environment in which speculators had great doubts about governments' ability to adhere to that discipline was a recipe for disaster. International capital flows became more erratic, not less, as doubts were raised about whether first the pound would be devalued and then the dollar. Britain gave in to the speculative attacks and abandoned gold in 1931, whereas the U.S. toughed it out by deliberately raising interest rates in 1931 at a time when the economy was already near free fall.
Because of this uncertainty, there was a big increase in demand for gold, the one safe asset in this setting, which meant the relative price of gold must rise. If everybody is trying to hoard more gold, you're going to have to pay more potatoes to get an ounce of gold. Since the U.S. insisted on holding the dollar price of gold fixed, this meant that the dollar price of potatoes had to fall. The longer a country stayed on the gold standard, the more overall deflation it experienced. Many of us are persuaded that this deflation greatly added to the economic difficulties of those countries that insisted on sticking with a fixed value of their currency in terms of gold.

A gold standard only works when everybody believes in the overall fiscal and monetary responsibility of the major world governments and the relative price of gold is fairly stable. And yet a lack of such faith was the precise reason the world returned to gold in the late 1920's and the reason many argue for a return to gold today. Saying you're on a gold standard does not suddenly make you credible. But it does set you up for some ferocious problems if people still doubt whether you've set your house in order. >

3) Some suggest that a gold standard retards the natural growth of an economy

 

[brewer12345]

No thank you on a gold standard. No room for the Fed to help nudge the economy out of a slump or back off from overheating. Considering the amount of debt out there, it would eventually be a disaster.

 

[Chris24]

An interesting currency play is the ETF, DVB , DB Commodity Services .

"The PowerShares DB G10 Currency Harvest Fund (Symbol: DBV) seeks to track the  Deutsche Bank G10 Currency Future Harvest IndexTM (Index). The Index is comprised of currency futures contracts on certain G10 currencies and is designed to exploit the trend that currencies associated with relatively high interest rates, on average, tend to rise in value relative to currencies associated with relatively low interest rates. DBV provides convenient access to the returns of the international currency markets by following a highly-developed index previously available only to very sophisticated investors."

Has a low correlation to the S$P and may be a good diversifier. They long 3 currencies and short 3. Not sure how it would react to a rising dollar.

Strategy



The investment seeks to track the performance, before fees and expenses, of the Deutsche Bank G10 Currency Future Harvest Index - Excess Return. The index is comprised of long futures positions on the three G10 currencies associated with the highest interest rates and short futures positions on the three currencies associated with the lowest interest rates. The G10 currency universe from which the index selects currently includes U.S. Dollars, Euros, Japanese Yen, Canadian Dollars, Swiss Francs, British Pounds, Australian Dollars, New Zealand Dollars, Norwegian Krone and Swedish Krona. The fund is nondiversified.

 

[MasterBlaster]

If you have the guts to really make a killing here, borrow money in Japan where interest rates are around 1 percent. Then take that borrowed money and invest in Icelandic Krona (or other currencies) that pay ~11 percent or so.

That's what the carry-traders do. And they have done very well so far.

You could start your own hedge fund and invest other peoples money too doing this while raking in big fees for youerself !

- What a concept

 

[Chris24]

Hmm, the Finlandia/Sake Hedge Fund. Like the sound of that.

 

[MasterBlaster]

That Finlandia/Sake fund could be very lucrative.

For every billion you borrow you should be able to get almost 100 mill out of the deal every year.

The good life awaits

 

[Bigritchie]

I saw the dollar drop 17% during my trips to Brazil since January 2006. Add inflation and the overall cost to live there went up nearly 25%.

The currency I find most interesting is the Norwegian Kroner. They have an amazing economy (driven by oil reserves), a small population to take care of, low corruption and huge surpluses of cash.

They just had a article on drudge today how 1 in 86 of them are US millionaires and that does not include real estate values.

 

[bpp3]

If you have the guts to really make a killing here, borrow money in Japan where interest rates are around 1 percent. Then take that borrowed money and invest in Icelandic Krona (or other currencies) that pay ~11 percent or so.

That's what the carry-traders do. And they have done very well so far.

That's effectively what I do, though I just consider it diversification. If I happen to be getting a boost from the carry trade for now, great, but I do expect it all to unwind (any day now... as I have been thinking for years now...). Which probably won't be fun, but I plan to keep buying through the dip, same as with stocks.

 

[claire]

its around £3.00 per pint over here now - approx six dollars - scandelous isnt it?

 

[Grizz]

Jeez, seems like yesterday that my Canadian Loonie was at just 65ish cents to the US greenback. Now, thanks mainly to a crazy oil boom it's at about 95.5 cents.

It has been said and calculated that $90 oil will bring parody. When that day arrives, and assuming that the housing disaster in the U.S. continues its downward slide, I believe that it would signal the perfect storm for lots of Canadians looking to shed their scarfs and mittens and buy up Florida and Arizona property. Anyone teaching courses on how to operate an air conditioner?

 

[Basenji]

its around £3.00 per pint over here now - approx six dollars - scandelous isnt it?

Seems like it was just yesterday that we were paying 90p for a pint (ok, it was 1984-85), and with £1=$1 to $1.10, we were downing dollar pints. Woohoo!