No. of Recommendations: 0
This is probably getting a bit off track but if the exchange rate gets to a point where you feel it is extremely good for you, you can always "hedge" it with an ETF currency fund. That would kind of lock you into a rate.

For example (I'm making up these numbers) if one dollar equaled one Euro and you buy $5,000 worth of the FXE ETF. Then if the dollar got weaker by 15%, the fund would increase 15% and you would maintain the original exchange rate. So when you return and your expenses for your trip went up 15%, it would be offset by the 15% gain in the ETF. Obviously there are some commissions, etc. so it wouldn't be exact.

For most people it wouldn't be worth the effort, especially since guessing short term movements of currencies correctly isn't something most (any?) people can do.

As stannius mentioned the markets would not allow inefficiencies between the currencies to last.

Credit Unions generally have the best ATM/Credit Card fees on foreign transactions.

Also when you travel don't let the hotel, resort, etc. bill you in dollars instead of the local currency. They will tell you it is more convenient but you'll almost always will end up getting a poor exchange rate and the credit card company will still charge you the foreign fee since it is being done outside the US.

Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.