Buying US Dollars

wjsdunne

Is now a good time to be buying US Dollars and then hold on to them and cash them in when the Dollar becomes stronger again?

If so hows best to go about it? ???

deemy2004

Depends on your time frame.

If your planning on buying dollars now and hold them no matter what happens until prices go to say $ 1.50 then yeh it is a good time, though you may need to wait many years.

Usually the best time to buy a position is AFTER a market has junctured. i.e. On the current situation it would be say a decline to below 180. Yeh I know its some 14 cents away, but buying at 194 and watching it go to 220 is carrying a greater risk , then the trend turning and the market going in your favour from entry onwards.

Now obviously if it does not go to below 180, you don't enter and thus wait for an entry trigger off what ever high the market makes.

Maybe some time down the road the £ peaks at 220 and you get a sell at say 208. But key thing is to let the market prove that it has reached juncture before taking a long-term bet.


Personally, I would not buy the dollar until its proven its juntured, and even then use a trailing stop.

If you want to buy straight dollars then the best are the citibank accounts.

If you want to trade FX proper on margin then take a look at CMC

Walletwatch

Not sure what kind of corpus you have in mind. The scale of your deals needs to be reasonably high for the returns to be worth the effort (not to mention the risk)

This is of course, the best time to make a trip to the US, do your Christmas shopping and be back, and you'd still spend less than what you would doing all your shopping here...

yetty_2

Hi Demmy,

Can you tell me a little more about "...citibank accounts..." ?

Rgds. Yetty.

HB

Walletwatch is probably spot on, especially if you are not intending to buy thousands of dollars just to hang onto them, to make them worthwhile in the long term.

My suggestion: buy stuff on US websites using your UK creditcard and have the products shipped here. You not only get the product you are after, christmas shopping is easy(er), you avoid crowds, AND you get a good exchange rate.

Rafter

Holding cash (which earns no interest and loses value due to inflation) may not be the best plan?

Depending on your attitude to risk you could invest in US securities (either government bonds or shares)?

With american interest rates so low, oil price high and an enormous trade and government deficit though, I'm not sure the dollar hasn't got further to fall yet though.

Unless you are willing to speculate over the longer term, I don't think you will make any money for a few years.

R.

Seamus

One way of taking advantage of the weak dollar is to invest in an OEIC that tracks one of the US indexes.

I have a Self Select ISA through which I've invested in Barclays S&P500 tracker Ishares.

Hopefully if the dollar strengthens and the S&P500 grows over the next few years I should get a double whammy gain. Obviously , if the dollar continues to weaken and the S&P dives then I get a double whammy loss but as long as you are happy with the risks it is an option.