Anyone know good foreign currencies to hold?


#1

I’ve done a lot of research on foreign currencies and which are good to hold… its pretty complicated. it seems obvious, swiss franc, hong kong dollar… but when you look at if you want to open a swiss bank account they require a very high minimum balance, can charge you just to hold swiss francs, etc… anyone have a deep understanding of this stuff?


#2

Open a broker account and buy from there.


#3

I don’t think it’s currently a good idea to buy Swiss francs. In January a decision has been made by the Swiss national bank which made the Swiss franc jump up by 20%, it already has started to normalize a little again, but the value is currently still very high.


#4

Thanks for the info… true… If I bought it too high and it normalizes or goes down that would be a huge loss… I just want to diversify my currency. I feel the USD is pound to go down substantially in the next 5-7 years… how is it possible that all these dollars are being printed and you aren’t seeing higher monetary inflation… and eroding of purchasing power. What do you think about the Hong Kong dollar? Singapore dollar or something else?


#5

It’s pegged to the USD, so will go down also unless they remove the peg.

Could be a good choice, but remember the Asian financial crisis of the late 90’s? The east isn’t immune to currency crashes either.

Personally I keep my money in my home currency and just withdrawal the local currency in whichever country I am in. Only what I need.


#6
  1. Everytime you change currencies, you could be losing up to anywhere from 0.50% - 10% on the exchange rate premium over spot rate (depending on what company/bank you use).

  2. When it comes to currency speculation, it’s unlikely that regular people are going to beat the institutional players (like hedge fund manager George Soros), since the institutional players have much better information, and they also have the scale to actually break markets (like how George Soros broke UK’s currency peg in 1992).

If you really can predict the direction of currencies, then you should just become a billionaire hedge fund manager. But realistically, you’re probably better off just holding your money in the currency that it’s received in (income) or spent in (paying bills). The exception might be if you’re living & working in a place like Venezuela or Argentina, where the government is printing the currency into oblivion.


#7

umm the United States is printing money into Oblivion! Holding dollars is going to get more dangerous… I know the value of the dollars has risen… but its propped up because people think it has value and is still the reserve currency of the world… that will change soon. It makes sense to hold something like the Hong Kong Dollar, which is pegged to the USD, but they can unpeg it if something really bad happens to the dollar. There is risk in everything… its all Fiat money, better to go after better fiat money or diversify I think… Argentina’s money is not even a place I’d consider.

my goal is not to use it as a way to make money like George… my goal is to use it to preserve value… and if one has a lot of cash I don’t see the argument against doing it.

I can’t imagine why you would lose .5%-10% ? especially if I was going to a bank in a country where I’m converting to their currency and they want my business for me to deposit my money there… I don’t know why that would be set in stone… unless you are trading from the US or something… I’ll have to research that.


#9

You can also consider a 10% porftolio allocation to physical gold, if you’re worried about fiat currency hyperinflation. But that’s a bit complex, as it introduces issues with theft, violence, counterfeit coins, differences between gold bullion coins, testing methods, storage, containers, transportation if needed, etc. Before you get involved with physical gold, you’d want to spend a lot of time studying all the logistics & practical issues, and take detailed notes.

In general, when changing currencies, the exchange rate you’ll get charged will be a premium over spot rate…

  • Typical HK Bank: +0.50% over spot
  • Currency Transfer Service (transferwise.com, usforex.com): +0.50% - 1.00% over spot
  • Paypal: +2.5% over spot
  • Typical US, UK, Australia Bank: +4.0% - 5.0% over spot.
  • Cash swap at Travelex airport kiosk: +10.0% over spot, plus $10 service charge.

So when changing currencies, you have to be careful that you’re not getting destroyed on the currency exchange rate, when compared to the spot rate.


#10

Good to know… is there a way around it? or any way I change currencies I’m going to lose that amount?


#11

apparently from some of the research I just did says basically that even though you may lose that .5-1 percent… it doesn’t matter because the point is to get out of a potentially unstable currency… that that loss is acceptable… and only means something in the immediate short-term. I for one believe that US has to default on its debt in the next 5 years… I don’t see any way around it. You can bet there will be a massive decline in the value of the dollar… will this actually happen? who knows… but if you look at the data… how long can it go on like this for? Debt ceilings can’t be raised forever, and it is statistically impossible to for the government to pay of the debt at this point… printing money is what they love to do…


#12

supposedly someone who is pretty credible says that on a $50,000 transaction from USD to Hong Kong dollars that $100 was paid as a conversion charge. That is pretty low… but who knows.


#13

http://www.transferwise.com is pretty good for getting around the fees and conversion cost apparently.


#14

I’m sure zerohedge articles will make people think that.

Meanwhile, the US dollar has only strengthened over the last 10 years…

Credit default swap spreads imply USA has a mere 0.3% chance of annual default…

And even if you go by USA’s WORST credit rating (“A-”, by China’s credit rating agency Dagong), USA only has a 4-5% of default over the next 10 years…

The idea that “US has to default on its debt in the next 5 years” is something I expect to hear from an episode of “Doomsday Preppers”.


#15

Depends on the company/bank.

  • If you’re wiring HKD > USD from Hang Seng Bank (HK) to Bank of America (USA), you might get charged 0.2% premium over spot rate (as you implied). As I stated earlier, HK banks have some of the narrowest currency spreads.

  • If you’re wiring USD > HKD from Bank of America (USA) to Hang Seng Bank (HK), you might get charged 4.0% premium over spot rate, or lose $2,000 on your $50,000 transaction. In this case, you’d probably want to use a currency transfer company like Transferwise or USforex.


#16

I see… very interesting… any tips on learning more about this stuff? I’m going to spend some time researching this default thing— I just don’t understand the fact that they are borrowing to pay their debts, then have interest to pay on those debts… its seems mathematically impossible… in 10 years I’m hearing it could get to 25 plus trillion in debt …what do they do; just keep raising the debt ceiling forever? I’ll have to read all those links you posted and will respond back after I look at it.


#17

wait a sec… the AAA credit rating to the United States is an illusion isn’t it? Even moody’s downgraded them, but changed it under threat of lawsuit by the US government… I don’t get what the data is based on.


#18

[quote=“travelguyny, post:17, topic:2671, full:true”]wait a sec… the AAA credit rating to the United States is an illusion isn’t it?
[/quote]

Sure. That’s why I said “worst”. I’m not even considering USA’s AAA credit rating from Moody’s, since it’s probably artificially high. I only mentioned USA’s WORST credit rating (“A-”, by China’s credit rating agency Dagong).


#19

looked at the government budget… it looks like the national debt will be 27 trillion by 2025 if I’m reading that right… and i’m not sure if I am… I’m a little scared case I have this money market fund which I thought was extremely low-risk. then I see what the fund is in and its 30% “government obligations” which has me nervous as hell and I’m moving everything out of it.


#20

Can you send money from a HK corporation (in corporation’s name) to a personal bank account in Australia using Transferwise?


#21

Even without getting into whether the USD will fall or not, I think it makes sense to hold onto currencies, especially the ones that you’ll be using often and especially when they’re on "sale."
In the hope of bringing an old thread to life again - how would you guys do this? For example, I’d like to buy currencies that I use/will be using somewhat frequently (CAD, EUR, GBP, ZAR, SGD, HKD, COP, etc) when they’re cheaper than usual and then store them somewhere, sort of like a multi-currency savings account.
Would opening up a multi-currency bank account be the best for this? Or a brokerage account like Interactive Brokers (the only downside I can see to using IB is that they have a minimum monthly fee)? Or is Transferwise the way to go?
Any insights?