# Newbie question - cashing in US stocks, avoiding exchange rate?



## weev (4 October 2007)

Hi

I am an aussie with shares on the US stock exchange.

I need to cash some in but wondering if I can avoid the terrible US -> AU exchange rate.

Can I hold my funds in US dollars somewhere? So say if I travelled to the States I would have it available. Or could I turn them into travellers cheques or simple open a US savings account.

Any tips or advice would be appreciated.


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## It's Snake Pliskin (4 October 2007)

weev said:


> Hi
> 
> I am an aussie with shares on the US stock exchange.
> 
> ...




Exchange rates are a risk of doing business with other currencies or across borders. the past may not have been the norm, and the US dollar is still stronger. Think of the opportunity cost involved too.


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## wayneL (4 October 2007)

weev,

The time to have worried about exchange rate risk is when you implemented the trade. Now is to late, no matter what you do, you've been screwed by the USD tankage.

Whether you can keep the proceeds of the sale in USD very much depends on your broker and still leaves you open to exchange rate risk, but without the opportunity for cap gain on your shares (or risk of loss).

What you are proposing here is to exit your US share trades and go long on the US dollar. Is this really what you want to do?

If so, you just need to short some AUD futures or short AUD/USD forex to the value of your share sale proceeds. Again, are you sure this is what you want to do?

Cheers


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## weev (4 October 2007)

Thank you snake pliskin ('I thought you were dead') and wayneL for sage advice.

Can you explain tho what you mean by 'short' and 'long'.

Wayne, I think you are right. I was hoping the USD would bounce back against the AUD. Tis a funny twist to want your own currency to go down but I bought my shares when our dollar was 59c. Youch.


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## greenfs (4 October 2007)

I have today sold out my NWS partly for the same reason. It really has been a trfle disappointing. Watch them go up now that I am not a holder.


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## tayser (7 October 2007)

weev said:


> Can you explain tho what you mean by 'short' and 'long'.




Going long on the US dollar in your context would be dumping (holding) the funds in a USD denominated bank account (here or in the US) or in some other instrument and speculating/hoping the USD will strengthen against the AUD then at some point sell your USD and buy back AUD at a more favourable exchange rate.

Going short would mean selling your USD now and buying back AUD at the current rates (current spread on AUDUSD is roughly: .8973/75)

long means buy and short means sell.

Below is a monthly chart of AUDUSD (exchange rate on right hand side) - it speaks for itself really:





(click it for larger/clearer version).


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