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I earn in euros, but have sterling and dollar liabilities that need to be paid monthly. Assuming the euro will continue to decline against these currencies, is there anything I can do to protect or mitigate these liabilities against continued euro currency decline? Is there any strategy to insure myself against the exchange rates becoming onerous?
The only way I can think of is, in periods when rates seem reasonable, exchange and stockpile reserves of the foreign currencies?
Since you assume a continuous decline, you could sell spot EUR for USD and EUR for GBP. Because you're talking about liabilities, you know exactly how much you need to hedge (interest payments + principal).
That's what Futures are for. A Future is a contract that says "I pay this for that, at a specified time in the future".
For example a EUR/USD Future DEC 2015 at 1.2085 is a contract where you pay (contract size)*1.2085 USD now, to receive (contract size)*1 EUR on DEC 2015. The problem is that contract size is relatively large (125'000 EUR), so it depends on how much money you are talking about. In your case you would sell a contract, not buy one.
Another way is to go for relatively safe investments in the target currency, or to invest most of your Euro capital into a selection of relatively stable European companies that make most of their income in the US/UK. You could even go with a margin account and short some companies whose income is in EUR, and use the money to buy some companies whose income is in USD and GBP. If you do this make sure that you select a wide range of stable companies and don't overexpose yourself to a rising EUR.
