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A local economics professor recommended opening a "checking account" (forex account?) in USD with euros. He estimates a 5 to 10% yearly growth in the EURO value of such an account. For instance, converting 500 euros to USD now and converting back in a year would net you 525-550 euros (excluding forex costs).

The idea seems to be that the USD is expected to continue climbing, especially compared to the EUR which is weak and unlikely to recover because interest rates are kept low.

  • Is this solid advice?
  • Would it be solid advice depending on the currency conversion costs?
  • Does this carry the same risk as normal forex speculation or is it lower risk because it involves (seemingly) stable economies?
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No, this is not solid advice. It's a prediction with very little factual basis, since US interest rates are kept just as low and debt levels are just as high as in the Eurozone. The USD may rise or fall against the EUR, stay the same or move back and forth. Nobody can say with any certainty.

However, it is not nearly as risky as "normal forex speculation", since that is usually very short term and highly leveraged. You're unlikely to lose more than 20-30% of your capital by just buying and holding USD. Of course, the potential gains are also limited.

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