Buying stocks in foreign currencies now

[perulv]

My local currency is NOK (Norway), and it is totally crushed lately (https://www.xe.com/currencycharts/?from=USD&to=NOK&view=1M). If I buy stocks in USD now and things become somewhat normalized, I might lose 20-30% in currency-fluxuations.

 

I know that this is always the risk of buying in a foreign currency, but this situation seems extreme. I can buy by loaning in USD in my online brokerage account, but the interest is high (7%). This would cancel out the currency-risk, at a fixed price.

 

Would you do this today? There are companies that are starting to look attractively priced, and my thinking is that some reversion to the mean is more likely than not. Or at least that a known 7% loss is the lesser of two evils right now. Last time I looked into it, I did not find better means of currency-hedging (for the small positions I take).

 

(Edit: the flip-side is of course that my USD positions have been worth 30% more for the same reason.)

[KCLarkin]

I can buy by loaning in USD in my online brokerage account, but the interest is high (7%).

 

Interactive Brokers an option?

[bizaro86]

You should definitely switch to IB. Rates nowhere near 7%.

[perulv]

I live in Norway and am a Norwegian citizen, so I dont think IB is an (practical) option.

 

I ended up selling some USD at the (for now) crazy rate of 11.5 NOK pr USD, hedging about half the value of my USD portfolio. I tend to mess up these attempts at hedging, time will show how it turns out.

 

[bizaro86]

I live in Norway and am a Norwegian citizen, so I dont think IB is an (practical) option.

 

I ended up selling some USD at the (for now) crazy rate of 11.5 NOK pr USD, hedging about half the value of my USD portfolio. I tend to mess up these attempts at hedging, time will show how it turns out.

 

Why wouldn't it be practical? IB offers accounts to Norwegian citizens according their website: https://www1.interactivebrokers.com/en/index.php?f=7021

 

I went into the application process and Norway was one of the choices for your country of residence. If they have a brokerage license there it seems pretty likely you'd be able to transfer your existing accounts to them, or at least wire the money. I suspect any fees charged for a wire would be outweighed by the savings in margin very, very quickly.

[perulv]

I live in Norway and am a Norwegian citizen, so I dont think IB is an (practical) option.

 

I ended up selling some USD at the (for now) crazy rate of 11.5 NOK pr USD, hedging about half the value of my USD portfolio. I tend to mess up these attempts at hedging, time will show how it turns out.

 

Why wouldn't it be practical? IB offers accounts to Norwegian citizens according their website: https://www1.interactivebrokers.com/en/index.php?f=7021

 

I went into the application process and Norway was one of the choices for your country of residence. If they have a brokerage license there it seems pretty likely you'd be able to transfer your existing accounts to them, or at least wire the money. I suspect any fees charged for a wire would be outweighed by the savings in margin very, very quickly.

 

You are right. Thanks for pointing this out to me, I'll check it out.