Expat Exchange
Free MembershipSign In

Portugal Expat Forum

Managing USD/EURO exchange rates

New Topic Newest First
Bmore2Port19
  1/6/2020 17:33 EST

Hey All,

It was pointed out to me that voltility in USD/EURO exchange rates could truely impact ones budget and long term viability.

Hopefully, swings in the future exchanges rates will be somehat more stable going foward. However, I am sure it is something that many of you stay glued.

Curious of strategies some may engage to stay off threat of a weakening dollar, plus the general sentiment of the trend, short and longer term.

Appreciated...

Bemadam
  1/8/2020 06:06 EST

Talk to your bank about engaging in a forward rate agreement. This is a personalised agreement between you and the bank that enables you to sell dollars forward ie you sell them at a pre-determined point in the future, but at an exchange rate agreed today.

Forward rates are determined by interest rate differentials, and since they are low both in the US and euro one, the forward rate you get won't be much different to today's spot rate, unless that differential widens significantly.

Let's say you need $20,000 a year to live on in Portugal, and you want a guaranteed exchange rate for the next five years. Then you'd enter five separate forward rate agreements to sell $20,000 at the end of each of the next five years, for euros. The exchange takes place in the future, no funds are exchanged today when the agreement is set up.

Since a forward rate agreement is not a standardised contract, but a personalised one, do shop around to be sure to get a good rate.

Hope this helps.

AnchorLessAnchorLess
Connect

AnchorLess provides services to help you settle into your new life in Portugal. you are guaranteed to have access to a convenient, quick and reliable service, with a team always ready to answer all of your questions about your new adventure.

Click connect to have our partner contact you via e-mail and/or phone.

AnchorLessAnchorLess

AnchorLess provides services to help you settle into your new life in Portugal. you are guaranteed to have access to a convenient, quick and reliable service, with a team always ready to answer all of your questions about your new adventure.
Connect

Click connect to have our partner contact you via e-mail and/or phone.

Bmore2Port19
  1/8/2020 09:55 EST

Bemadam

Thanks for that insight.

When you speak of "Your Bank" are you speaking of the one you have in US or PT?

Bmore2Port19
  1/8/2020 09:55 EST

Bemadam

Thanks for that insight.

When you speak of "Your Bank" are you speaking of the one you have in US or PT?

Bemadam
  1/10/2020 06:50 EST

You can do it either way. Probably the US bank would be a better option since it's dollars you're selling forward though the US banking system is antiquated compared to Europe (still extensive use of cheques in the US which disappeared years ago in Europe, and other reasons). You will need to go a good few levels above the bank teller who probably has no idea what a forward agreement is. Keep insisting.

Be aware of what a forward agreement really means. You are locking yourself into an exchange rate determined today. That means if the US dollar continues strengthening, you don't benefit from this. You get the fixed exchange rate you agreed to in the past. Consider it the price you pay for the certainty of having the protection of a fixed exchange rate.

LaFong
  1/15/2020 18:33 EST

The dollar is currently very overvalued according to the financial pundits. It might be a good idea to invest in Euros as a hedge. That strategy won't work for me, since I will be receiving monthly pension payments.

AnchorLess
AnchorLess

Turn relocation stress into success with AnchorLess. From obtaining your NIF to a complete VISA support, we will be your guide through Portuguese administrative.
Learn More

AnchorLessAnchorLess

Turn relocation stress into success with AnchorLess. From obtaining your NIF to a complete VISA support, we will be your guide through Portuguese administrative.
Learn More

Living in Portugal GuideLiving in Portugal Guide

Our Living in Portugal Guide is a primer on everything about living in Portugal: best places to live, cost of living, pros and cons, healthcare and insurance, obtaining a driver's license, how to bring your pet with you and more.

Portugal Forum Portugal Forum
Join our Portugal forum to meet other expats and talk about living in Portugal.

Contribute to Portugal Network Contribute
Help other expats and newcomers by answering questions about the challenges and adventures of living in Portugal.

Best Places to Live in Portugal Best Places to Live in Portugal

If you're thinking about living in Portugal, here are the 15 Best Places to Live in Portugal in 2023.

Healthcare in PortugalHealthcare in Portugal

Expats in Portugal with a residency visa can participate in the national health care system. Here's what you need to know about the SNS and the combination of public and private services you'll need to manage your health in Portugal.

Cost of Living in PortugalCost of Living in Portugal

Expats offer insight into the cost of living in Portugal.

Moving to PortugalMoving to Portugal Guide

Expats moving to Portugal are drawn by a variety of places to live, a rich history and so much more. Here are some tips on what it means to move there, and how to make it happen.

Real Estate in PortugalReal Estate in Portugal

Real estate listings in popular cities and towns in Portugal.

Pros Cons of Living in PortugalPros & Cons of Living in Portugal

Take off your rose-colored glasses and learn what expats have to say about the biggest challenges and the greatest rewards of living in Portugal.

Retiring in PortugalRetiring in Portugal

Advice for people retiring in Portugal.

Visa and Residency PortugalPortugal Visa & Residency Guide

Thanks to Susan Stults Korthase for this helpful overview of current requirements to begin the process of obtaining a Residency Visa when moving from the US to Portugal.

10 Tips for Living in Portugal10 Tips for Living in Portugal

If you've recently arrived in Portugal, here are 10 tips for digital nomads living in Portugal.

AnchorLess
AnchorLess

Turn relocation stress into success with AnchorLess. From obtaining your NIF to a complete VISA support, we will be your guide through Portuguese administrative.
Learn More

AnchorLessAnchorLess

Turn relocation stress into success with AnchorLess. From obtaining your NIF to a complete VISA support, we will be your guide through Portuguese administrative.
Learn More

Contribute to Portugal Network Contribute
Help others in Portugal by answering questions about the challenges and adventures of living in Portugal.

AnchorLess
AnchorLess

Copyright 1997-2024 Burlingame Interactive, Inc.

Privacy Policy Legal