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Thoughts in Charts: U.S. Currency

I took a trip to Europe after I graduated from college. My parents bought the plane ticket, and I was responsible for my “walking around” money. I wasn’t in the habit of following the currency market, so standing at the exchange counter it was pretty devastating to realize that my $500 was actually just going to be €367 Euros. Yikes! How was I going to afford gelato?

Our recent history has included a very strong dollar. This recent period of strength began toward the middle of 2014. During this time, it became less attractive to invest in foreign markets because these securities had significant currency losses when converted back to the U.S. Dollar.

While the current weakening dollar may mean that some poor college student is forced to eat gelato for lunch instead of a snack, it also means that international investment returns get a little tailwind.

I went and checked the rates around the time of my college trip. If I had stayed there for 6 months, worked some odd jobs and come back to the US with the same €367, they would have exchanged it for $540. That’s an 8% return.

I told my parents I should have stayed longer!

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