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Rand Hedge

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Not applicable
Hi All, I am planning a trip overseas in about 18 months and would like to hedge myself against the currency. The trip is being billed in dollars and the current two year trend of the Rand suggests that it would continue to weaken. Is there a way (accounts/investment/etc) that I can use to hedge myself against the depreciation of the Rand thus not blowing my budget? Ideally, I would love to buy dollars on each dip and just save it till then but not sure how to do this. Any assistance would be greatly appreciated.
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6 REPLIES 6
potter
Contributor
possibly a offshore account only option.
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Chopchop
Contributor
Click on instruments, currency futures, $/R Mar-14. If you going to buy USD from a bank anyway for your trip its better to go and buy them instread of this, though I think you have to have your flight ticket in order to do that (could be wrong). You usually end up worse off doing that than using a credit card overseas though.
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Super Contributor
FNB has got a dollar based product. So in essence, if the you have R5000 and the exchanges rate is R10, then in the dollar based product it will reflect at 500 dollar. If the exchange rate goes to R20, then when you close that account, you will be paid R10000 (500 dollars X R20),which you can covert into dollars, when you buy the actual currency. Enquire at any FNB branch , for the dollar based account PS... Not promoting any bank, merely helping this guy.
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Not applicable
3 options - 1) open on offshore account - expensive though and doesn't offer transaction capabilities 2) currency futures - probably the best way to do it 3) buy us$ cash or travelers checks. You will need a ticket though. My personal view, don't bother. Hedging is a form of insurance. You insure against events that will cripple you - you can't insure against everything in life. An overseas trip that ends up costing 20 or 30 percent more doesn't really classify as the crippling variety, I don't think.
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Not applicable
Hi All, Thanks for the feedback. I have checked out all the options you advised. Most are expensive. agreed FNB seems to have an account that's quite cheap to operate. However, I found a listed exchange traded note that allows you to buy US dollars from ABSA Capital and you can buy it online here. Thanks for all the help.
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Valued Contributor
ya the ETF easiest and cheapest
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