111op

In case you're curious, you can find some historical exchange rates here:

http://www.chartflow.com/ozforex/historybasic.asp

For the dollar against the yen, the dollar depreciated against then yen from around 135 Yen to the dollar in 1991 and reached a low of around 82 Yen to the dollar in 4/95. Subsequently it recovered to about the level it was at in 1991 in 1997 (quick recovery there!). The high in the last couple of years was in 8/98, when it breached 147. The current exchange rate is about 105 Yen to the dollar.

It's a little less dramatic for the pound. In 4/91, 1 pound = 1.78 dollars or so. In 8/98, 1 pound = 1.62 dollars or so. The exchange rate, as we know, has cracked 1.9 already.

By the way, George Soros made the famous bet against the pound in 1992. Not sure exactly when though. But if you look at the historical rates in three weeks in 9/92, the rate went over 2 dollars to 1 pound to 1.7, which is a 15% fluctuation in 3 weeks.

111op

This is an interesting article:

http://economist.com/opinion/display...ory_id=3445928

If I'm wrong, I guess I can look at a time frame of 40 years. If the past 40 years is a guide, the dollar will drop by another 2/3 over 40 years.

It'd be interesting to look at some interest-rate adjusted numbers though over a long time period. I wonder why that's not done. Japanese interest rates, for example, have been very low in recent years. So even if the currency is strong, holding it is less attractive to holding the dollar, for example.

Lovejoy

111op Take a look at Everbank.You can open a bank account in the US denominated in Euros.They call it the "World Currency Access Account" and I don't think there is any fees involved.
http://www.everbank.com/online-banki...ank/pro_evr_t1

111op

This is very interesting. Thanks, L. Have you used them? I've not heard of them, so obviously I need to research them more.

It's interesting, though, that the Euro interest rate is at 0.85%. Citibank typically sucks, but Citibank France offers a rate of 2%.

111op

By the way, another weird thing is that the 3-month Euro rate is 10 basis points higher than the longer-term interest rates. Usually rates increase with term -- unless the term structure is inverted currently in the Euro world (which I doubt).

Depositing Euros in a time deposit account earns interest, but it looks like depositing it in a usual account earns 0%.

They do offer a Chinese Renminbi option though.

111op

By the way, according to this, the bid/ask with Everbank is about 3/4 of a percentage point:

http://origin.bankrate.com/brm/news/...20040910a1.asp

So I should find out what Citibank offers.

It's a bit of a shame, as FX bid/ask spreads at the interbank level is usually around 0.01%. Granted, I'm not a bank. It's a bit like trading stocks, where institutional clients pay much lower commission.

111op

And here's an old article from Business Week (from 2000):

http://www.businessweek.com/2000/00_44/b3705144.htm

Everbank is mentioned. Also a bank called Banca Nazionale del Lavoro, which has a NYC branch that will allow clients to open Euro-based accounts (but this was in 2000).

Christina

hmmm.... 111op are you an economist or accountant or something? YOu sure get into this stuff.

IN any case, I just wondered if the account that says it is "denominated" in euro is really a euro account. It could just be USD but if you want to know the amt in euro, they divide it for you. At least, that's all denominated means to me.

Why don't you just diversify your investments, that's what I do. I have money in the European stock market (as well as Pacific) which has done about twice as well as the US stock market in the last year.

111op

You're right, Christina, about diversification. I actually have some money in Japanese stocks (not a lot). I use EWJ, an ETF that's traded on the exchange, that mirrors the Nikkei, I think, but obviously I was too late in the sense that I bought this when the market has already rallied. Also the currency exposure is unhedged, as far as I understand it, which means that if the Yen appreciates against the dollar, EWJ's return is higher (as this is traded in dollars).

When you invest in foreign equities, you're getting the effect of both the stock market and the currency exposure (as in the example above, if the currency exposure is left unhedged) -- so there's still a reason for considering investments that will expose you to just the foreign exchange fluctuations. For example your foreign equities investments could have been doing well because of dollar depreciation (but Japanese equities markets have done well in Yen terms this year).

Anyway, I'm just penny-wise, pound-foolish. The more I touch my money, the more poorly my investments do. Or I just don't invest -- which is even more foolish sometimes. Truly smart investors do not expound their views on Fodor's.

Ann41

I know a lot of US expats living in the UK who have had trouble opening a UK bank account. Many banks make them wait until they have been a UK resident for at least 6 months. Sometimes they even require this to add them on to a spouse's account. Ridiculous, yes.

111op

By the way, for those curious and still following the discussion, the bid/ask spread in the exchange rate is about 1% for Citibank France.

BTilke

Ann41, fortunately we had no problem. We were able to open our UK bank accounts a couple of months before we arrived here in the UK through the bank's private offices in Belgium. Perhaps it's harder for U.S. expats coming from directly from the U.S. instead of somewhere else in the EU.