I am thinking that my money gets converted into another currency when purchase an international ETFRight. If a particular Japanese stock is priced at 1200 yen, and you buy it when the yen/dollar ratio is 120 yen/$, then it costs you $10. If, a month later, the stock is still at 1200 yen, but the yen has strengthened to 110 yen/$, then your holding is worth $10.91. Or, if the yen weakens to 130 yen/$, then your holding is worth $9.23. Between late August and late October, a share of EWJ increased by about 18%, but the Japanese stock market (as represented by Nikkei or Topix) grew by less than 10%. The rest of the difference was due to the yen-dollar exchange rate, which went from about 118 yen per dollar to 108 yen per dollar. (I, of course, had sold my shares of EWJ in mid-August, just before the yen suddenly strengthened.)
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