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Situation forces me to repatriate foreign revenue valued in Euro to USA, which is not ideal at this moment because the Euro is at a low. To counter this, would it make sense to buy Euro in USA at the current low level while transferring and converting Euro in Dollar at the same time?

Summarized:

  1. Transfer and exchange Euro for Dollar (forced step)
  2. Buy Euro with the transferred dollar amount (voluntary step)
  3. Convert Euro to USD at a more preferable rate (voluntary step)
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    What do steps 1 and 2 accomplish? It looks like you plan to exchange your Euro for USD, and then buy Euros with those USD, putting you back where you started, minus exchange fees. – Nuclear Wang Oct 31 '18 at 19:21
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    You could hedge your exposure using a currency ETF (option) – 0xFEE1DEAD Oct 31 '18 at 19:27
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    I could be wrong, but I though repatriation was just an accounting mechanism. I'd check with a good CPA to see if you have to actually convert the funds to USD. – D Stanley Oct 31 '18 at 19:29
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    My point is, if you can afford to "buy Euros" then you can afford to keep the money in Euros and exchange later. Unless you plan to trade on margin or through CFDs, which is a horrible idea. – D Stanley Oct 31 '18 at 19:38
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    You cannot "offset" something >once you've already had a loss<. (Sadly!) – Fattie Nov 1 '18 at 8:37
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Your title is: "How to offset currency exchange losses?"

However your course of action could alternately make the following a more accurate title: "How to take on additional currency exposure / risk?"

Remember - you are thinking of the EUR being at a 'low', but that's relative to some historical period. If EUR reaches parity with the USD, then you might look back at this in 2 years and think "why did I buy EUR when it was at a high?"

If you expect future expenses in EUR [ie: you expect to retire there, or perhaps you have a summer home there and make mortgage payments in EUR], then buying EUR in advance could be one way to mitigate that risk [AKA 'hedge' it].

However if you don't expect any significant expenses in EUR in the future, then what you're really asking about is whether you should invest in a foreign currency. And the answer to that is, probably not.

Currencies are poor investments, because they do not have an inherent growth proposition. You buy stocks, because companies make things, and if those companies grow, they make more things, and you get more dividends - there is a real-world value proposition. With currencies, even if Europe's economy expands, if the US's economy expands even more, you could still lose money on your EUR investment. That's because currencies are a zero-sum game. ie: if one goes up, it is because the other went down.

Also, currencies are quite volatile, and therefore risky - there are a lot of fx investing questions on this site that give a deeper explanation into all of that. For now the key for you to understand is simply that what you are planning is fx speculation, whether you think of it that way or not.

  • "Currencies are poor investments, because they do not have an inherent growth proposition." While your answer is generally good, this statement isn't really relevant. When you buy EUR with USD, you're exchanging USD currency for EUR currency. You're holding currency either way. Unless OP has need for cash, they shouldn't be holding either. – Acccumulation Oct 31 '18 at 19:55
  • @Acccumulation Except in the case where your anticipated expenses are also in USD [ie: you live in the US and intend to continue with that], then you bear no currency risk. Holding cash is still not preferable, but you miss the point that holding a USD stock still bears USD-risk for non-US residents, and holding a EUR ETF bears EUR risk effectively the same as holding EUR cash as a US resident. – Grade 'Eh' Bacon Oct 31 '18 at 20:17
  • @Grade'Eh'Bacon Huh? Of course you have currency risk. It's called "inflation". – Acccumulation Oct 31 '18 at 20:20
  • @Acccumulation If you hold shares of a European company, and the USD strengthens relative to the EUR, as a US resident your shares will be worth less USD [the currency you use to eat]. As a European resident, this doesn't really impact you at all. This is an example of the type of risk from holding a foreign currency-denominated asset. It is a little odd that you are trying to say that currency risk doesn't exist. – Grade 'Eh' Bacon Oct 31 '18 at 20:32
  • @Grade'Eh'Bacon I specifically said you do have currency risk. However, the example you give is not a good one, as a weakening of the EUR will likely result in an increase in the nominal price of European companies. If the EUR/USD exchange rate is changing because of EUR inflation, and the nominal price of European stocks doesn't increase, then European residents absolutely will be affected. – Acccumulation Oct 31 '18 at 20:53

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