I live in the Euro zone, and my main bank account is here.

However, I also have a USD bank account located in the USA. I don't usually pay attention to the currency exchange market, but looking at the great rise of the dollar lately, I was wondering if there is a way I can optimize my finances at this point?

For example, let's say I have $10k in the American account. Last month it was worth 7.5k EUR, and now it's worth 8.6k. It seems like there's a clear gain to be had, but if I leave all the money where it is, then eventually it will return to the lower rate from before (or close to it) and the opportunity will have passed.

Is it a good idea to move the USD to the European account at this point, thus converting it to EUR while it's still worth so much?


This is called currency speculation, and it's one of the more risky forms of investing. Unless you have a crystal ball that tells you the Euro will move up (or down) relative to the Dollar, it's purely speculation, even if it seems like it's on an upswing. You have to remember that the people who are speculating (professionally) on currency are the reason that the amount changed, and it's because something caused them to believe the correct value is the current one - not another value in one direction or the other.

This is not to say people don't make money on currency speculation; but unless you're a professional investor, who has a very good understanding of why currencies move one way or the other, or know someone who is (and gives free advice!), it's not a particularly good idea to engage in it - while stock trading is typically win-win, currency speculation is always zero-sum.

That said, you could hedge your funds at this point (or any other) by keeping some money in both accounts - that is often safer than having all in one or the other, as you will tend to break even when one falls against the other, and not suffer significant losses if one or the other has a major downturn.

  • I understand, thanks. I've never done any investing for myself (stocks, currency, anything) so I'm very ignorant of how the markets work. My funds are already pretty evenly split so I suppose the safest thing to do is to just leave it as it is. One thing I don't get - how could I "lose the entire amount" in any scenario, unless the Euro goes into inflation or something? – jovan Jan 16 '15 at 17:26
  • The euro is constantly inflating, as are almost all currencies. You're not likely to lose all of the amount, but you never know what might happen; I probably could've worded that better, more like "it's less likely you take significant losses if one falls significantly". – Joe Jan 16 '15 at 17:28
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    Whether moving the money back to EUR counts as speculating and keeping it in USD counts as hedging, or the other way around, may depend on whether or not the OP has liabilities or expenses denominated in USD. – Trevor Wilson Jan 17 '15 at 2:30

Remember that converting from EU to USD and the other way around always costs you money, at least 0.5% per conversion. Additionally, savings accounts in EU and USA have different yields, you may want to compare which country offers you the best yields and move your money to the highest yielding account.


I would make this a comment but I am not allowed apparently.

Unless your continent blows up, you'll never lost all your money. Google "EUR USD" if you want news stories or graphs on this topic. If you're rooting for your 10k USD (but not your neighbors), you want that graph to trend downward.

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