Buying US Dollar?

Discussion in 'Business, Careers & Education' started by Brian SD, May 19, 2011.

  1. Brian SD

    Brian SD Moderator

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    As was popular some years ago with Japanese women, my girlfriend is telling me she's thinking about buying USD as the Yen is simply too strong and the dollar too weak to pass the opportunity up. Historically the yen is about 110 ish per dollar, but at the monent sits at around 81.

    Is there any particular not to do this? She thinks the government is is going to be taking action to raise the value of the dollar. To me it seems fairly benign as an investment. I can't really foresee the exchange rate becoming any less favorable than it is now, but I'm no expert (famous last words).
     


  2. Concordia

    Concordia Senior member Dubiously Honored

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    I know some smart hedge fund managers who think the yen will collapse vs. the dollar, but the timing of such a thing isn't easy to predict.

    If you want to take a look at purchasing power, The Economist has a Big Mac Index that compares prices in various currencies. Here's the one from last fall: http://www.economist.com/node/172577...ry_id=17257797
     


  3. Brian SD

    Brian SD Moderator

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    I really appreciate the link and overall I got a decent idea from it but more than anything it has just highlighted how clueless I am in terms of financial vernacular and how poorly I understand the whole subject. I'm such a layman. [​IMG]
     


  4. imschatz

    imschatz Senior member

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    Just buying currency is boring - and unlikely to have a serious return, unless you suspect a significant change in the relatively near future.

    Buy some US based ETF's, or GIC's. Something that will give you a return over inflation. Otherwise you're going to lose a chunk when you do the exchange, plus annually due to inflation. For example: if inflation is 2% and exchange is free .. you're going to lose 10.4% on your investment over the next 5 years (and 2% inflation is pretty low). You'd need the dollar to trade at 100 yen at the end of 5 years .. just to break even.

    Using 4% inflation, you'd need the dollar to trade at 90 yen at the end of 5 years.

    Stay ahead of inflation (ie: have a real return) .. and the change in exchange rates is a bonus.
     


  5. Brian SD

    Brian SD Moderator

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    That's exactly what I was thinking. I have an investment account with Fidelity that used to have 14k or so in it but I blew it all during my college years. Investing again there in some reliable funds going from Yen to USD could see some good returns when you multiply the gains with the exchange rate changes.

    Looks like theres quite a bit more to consider here.
     


  6. Todd6060

    Todd6060 Active Member

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    Google Jim Rogers USD
     


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