Exchange rate effect on US investment funds

[Bryan99]

WIth the rising price of the euro against the dollar, I have decided to increase my investment share in US funds as I will be able to buy more of them due to the exchange rate. I am in this for the medium term.

Any thoughts?

 

[ClubMan]

You are indirectly engaging in currency speculation in doing this.

 

[capall]

I think this is a good strategy,if you believe USD is going to strengthen in future

 

[jwd]

The US has been living on borrowed time, financially, for many years now. Their current account deficit is unsustainable, and the only way they can survive financially is to devalue the dollar, thus locking in the value of external investments, which is effectively what is happening at the moment by stealth. My opinion is that there is no short to medium term advantage in investng in dollar assets. You will just be paying for the follies of past investments.

 

[room305]

Depreciation of the dollar doesn't automatically devalue US stocks for Euro-based investors. Much like with other dollar denominated assets such as crude oil and gold, the nominal price of the underlying asset should rise to compensate for the falling dollar (all other things being equal i.e. a falling dollar does not directly affect the company the stock represents). Stock investors in Zimbabwe have fared quite well despite an ongoing bout of hyperinflation.