How Do You Protect Yourself From Currency Flucuations?

[JJReyes]

Even though they have their own currency, Cambodia, on a street level at least, deals mainly in USD too. 

 

Thanks for the info. I will have USD in smaller denominations when we visit Cambodia. 

[Curley]

 

Even though they have their own currency, Cambodia, on a street level at least, deals mainly in USD too. 

 

Thanks for the info. I will have USD in smaller denominations when we visit Cambodia. 

 

 

Ensure that the notes are recent, clean and not torn or defaced

[Curley]

The US dollar has been on the rise against all major currencies and the US stock market is, in my opinion, dangerously over valued; just take a look at the price to earnings ratios. I feel that we are due for a correction this year. Maybe the Aus dollar will climb again if this happens. Depending on the amount you want to exchange you can fix your rate in advance but probably not worth it if it is just monthly pension payments.

[JJReyes]

the US stock market is, in my opinion, dangerously over valued; just take a look at the price to earnings ratios.

 

I have a substantial amount in cash for the past six months waiting for a market correction. Perhaps it will happen before the end of the year. The only stock I got tempted to purchase was Tesco, the U.K. grocery retailer. The recent plunge to near book value was just too tempting. In theory, I could at least get my money back if the company were to liquidate. There are risks, but the long term upside is worth it.

[BrettGC]

The US dollar has been on the rise against all major currencies and the US stock market is, in my opinion, dangerously over valued; just take a look at the price to earnings ratios. I feel that we are due for a correction this year. Maybe the Aus dollar will climb again if this happens. Depending on the amount you want to exchange you can fix your rate in advance but probably not worth it if it is just monthly pension payments.

 

 

As to the question of the market correction; despite the strong quarterly forecast for Europe on Thursday, good economic outlook here in Australia, the ASX still dropped 2.5%, the biggest fall in 18 months.  The banks and economists here have finally admitted we're experiencing a relatively major housing bubble as well.  Despite this, the Reserve chose to keep the cash rate down at 2.5% rather than raise it to alleviate the the inevitable burst when it happens; historically, when they keep it low, the AUD stays low - yes this is a deliberate move on their part to help exporters and encourage foreign investment, not good news for self-funded retirees or people relying on AUD in foreign countries.  With aging populations this is going to become a real issue in the not-to-distant future and for many over 60 is a harsh reality now here in Australia.  China going "green" (a very relative term for China) and imposing tariffs on coal imports (we export a lot of coal to china), and the stronger Euro have also contributed to the AUD slide.   

 

It seems to me that if a butterfly farts in one country, the markets have a perception there may be a stink, and react like a teenage girl who's been hearing rumours about herself.  

 

Edit: Forgot to link an article that makes for interesting reading with regards to the Australian dollar and to a lesser extent, world economies:

 

https://www.businessspectator.com.au/article/2014/10/11/interest-rates/weekend-economist-dollar-dazzler

Edited October 12, 2014 by BrettGC

[jpbago]

  I do a wire transfer C bank to PI bank once every 10 months or so at a cost of $30, then I split it into 2 accounts and we use our local ATM with no fees. 

  There are enough things to worry about here as it is.

[frosty (chris)]

One of the reason the US $ recently has had an upswing is that dealers consider the US a safe haven ( when really it is the Swiss Currency). The Aus $ will usually react completely opposite to the US. If you read that linked article by there own admission they have called the AUS $ wrong, so much for Economists,usually good advice after the fact. You would be better off asking a Japanese housewife (don't laugh) doing a carry trade  what the situation is and I bet they would be closer to the mark than most economists. When the Reserve Bank finally raises the cash rate here, to stop the housing bubble they say we don't have, then you will see the smart money buy up the AUS $. for better returns on there investment. I really doubt we will ever see it get to previous highs but I would hazard a guess and say around the 95c mark. There a lot's of reasons for why currencies fluctuate most we will never no and when you consider that it is a 3 trillion dollar a day market you can be sure some one some where is making money which ever way the market goes, up or down. There is a saying    " Buy the rumour, Sell the Fact ". Says it all about any market trading.

Edited October 12, 2014 by frosty (chris)

[BrettGC]

That's what I took away from it as well Chris:  Smoke and mirrors

[stevewool]

I wonder if i have enough not to bother with investments, just a large amount of cash that will last me and my partner our life, 

What ever amount we have its a set amount say £70,000, i would rather it be safe and knowing i have that amount all the time rather then worry it may go down with investments , yes it would be great to go up , but whats the saying, be happy with what you got, just a thought

[JJReyes]

What ever amount we get is a set amount say £70,000, i would rather it be safe and knowing i have that amount all the time rather then worry it may go down with investments , yes it would be great to go up , but whats the saying, be happy with what you got, just a thought

 

The problem is inflation will erode your purchasing power.

 

I did a lot of research prior to retirement. My goal was to have sufficient financial resources to last 20-25 years. There is only one stock that had historically performed well in both good and bad years. Actually the performance is much better during bad economic times. That's Warren Buffett's Berkshire Hathaway. Class A started at $ .25 a share. Today it is over $200,000. Class B is more reasonably priced at around $140. One difference is you can't vote as a shareholder with B, but so what. There are no dividends paid, which is advantageous from a tax point. After holding at least one year, you pay capital gain tax if and when you sell.

 

My wife and I have a very diversified portfolio, but a significant amount is BRK.B