Record low exchange rate for a country I'll be visiting next year - how can I take advantage?
I will be travelling to another country in one year. While trip planning, I noticed that the exchange rate is more favorable right now than it has been in the last 10 years. In fact, the dollar will get me 20% more currency than the same time last year.
I'm worried that the dollar will lose value relative to the local currency before I go.
How can I capitalize on the current state of the market? Using banks for currency exchange (I checked BofA and Wells Fargo) will destroy most of the gains I could realize. Online currency exchanges are even worse. From other people's trip reports, I've seen that using an ATM in the country to withdraw currency is usually around 1% of the spot price I see on sites like XE (less a fixed ATM fee) but that's not an option before I travel.
As I post this I suppose I'd see the same benefit if I were to purchase the currency through my broker and just held that position until I traveled and then converted back to USD and withdrew it on the same day.
Best Answer
There are some pre-paid travel credit cards around. With these you
- load the card in your home currency
- then convert it into the currency of the country at any point before you travel
- use the card like a normal debit or credit card, slowly spending you balance
This allows you to lock the currency rate before you travel. Since you are proposing to spend a fairly large amount of money, the cards that give you the mid-market exchange rate but with an small annual fee are probably best for you.
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Imports, Exports, and Exchange Rates: Crash Course Economics #15
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