Take advantage of Euro/Dollar parity?

[Fermion]

Curious, other than taking a vacation in Europe, has anyone found or considered a way to take advantage of the current 1 Euro = 0.98 USD? Especially in a retirement account? Like is there a low cost fund that lets you buy $200,000 USD in Euros and hold them in a low risk saving account?

 

[Closet_Gamer]

Rather than a straight currency play, you could buy an ETF that invests in european countries equity or debt. You'd pick up a dividend along the way and if the dollar retreats the value of the fund should increase.

Essentially use the parity as buying power rather than just holding the currency.

 

[Fermion]

According to investopedia:

"There are no ETFs that trade in the United States exclusively dedicated to European treasury bonds. However, there are international treasury bond ETFs, all of which have large European treasury bond allocations."

 

[OldShooter]

... and you want to be a FOREX trader because? That is a particularly vicious market.

 

[Fermion]

... and you want to be a FOREX trader because? That is a particularly vicious market.

What can I say, I like to gamble. A quick flip and 10% return on a Euro recovery later this year.

I don't see a way to do it though without high fees.

 

[38Chevy454]

It seems to be an extreme market timing plan. Too much risk for the potential return. Although I do agree that the US $ is high right now and there will likely be some reduction in future, that reversion back to mean thing.

I think below is the way to play the timing if you really want to.

Rather than a straight currency play, you could buy an ETF that invests in european countries equity or debt. You'd pick up a dividend along the way and if the dollar retreats the value of the fund should increase.

Essentially use the parity as buying power rather than just holding the currency.

 

[Bryan Barnfellow]

... and you want to be a FOREX trader because? That is a particularly vicious market.

I couldn't agree more. I know someone who was king of forex in the US, making several hundred million a year; now virtually penniless after a string of wrong bets.

Best not to pit your hunches and advice from popular fx press against well funded people with sophisticated algorithmic strategies!

-BB

 

[OldShooter]

What can I say, I like to gamble ...

Really, the exchange rate is just a number. 1.0 has no more significance than 1.2 or 0.85. Whatever the number is, one can have a "gut feel" that it will move in one direction or another. If you like to gamble, that's fine. Hopefully with a tiny fraction of your portfolio.

Remember, though, that the serious players in the FOREX market know far more than you do and their consensus right now is the current rate. If they thought the Euro was undervalued, that would have been corrected with a higher price. The EMH, IOW.

 

[braumeister]

Looking at the ten year chart, I really wouldn't expect it to go a lot lower.

 

[Freedom56]

Curious, other than taking a vacation in Europe, has anyone found or considered a way to take advantage of the current 1 Euro = 0.98 USD? Especially in a retirement account? Like is there a low cost fund that lets you buy $200,000 USD in Euros and hold them in a low risk saving account?

The problem is the yield that you could earn while it is sitting in Euros and where you would hold it? The yield are much lower and one of the reasons why the USD is surging against other currencies. HSBC and Citibank International allow you to hold foreign currencies but have many conditions. A Citibank International account requires a $200K minimum deposit to waive fees. The fees are $150 per month if it drops below the minimum. HSBC has a lower minimum balance requirement but you have to make minimum monthly deposits plus you have to have a mortgage with them. We used to have a bank account in Switzerland but in 2011 had to close it as Swiss banks were no longer allowing U.S. Citizen to hold accounts there. Our Swiss currency was earning very little interest but at the time we had to close our account the bank gave us 2 months to transfer our money. We did wire transfers to our brokerage accounts here and at the time we received $1.22 USD for 1 CHF which was great. We still required a foreign currency account since we do spend on average 1-2 months per year in Europe and own property in Switzerland. To open a foreign currency account, we flew to Toronto and opened one at CIBC. Canadian banks are much safer than US banks in terms of financial stability. They are heavily regulated and none of the six chartered banks in Canada required a government bailout in 2008/2009. We hold currencies in USD, Euros, CHF, and CDN at CIBC. We have an ATM card that allows us to withdraw cash at ATMs on the Plus and Interac networks. We also have online access to our account to transfer currency. The minimum deposit to waive fees was only $10K at the time we opened the account but we hold much more. You have to complete a FBAR filing every year for any account over $10K and we do that online when we file our taxes. You also have to report interest earned on your foreign accounts when you file your taxes. Canadian banks do not provide 1099s but they do report banking information to the CRA who then provide the information to the IRS.

 

[GravitySucks]

Looking at the ten year chart, I really wouldn't expect it to go a lot lower.

Not sure what it's going to look like when winter comes and no Russian gas is heating EU homes next January.

Sent from my LM-Q850 using Early Retirement Forum mobile app