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I will be travelling to another country in one year. While trip planning, I noticed that the exchange rate is more favorable right now than it has been in the last 10 years. In fact, the dollar will get me 20% more currency than the same time last year.

I'm worried that the dollar will lose value relative to the local currency before I go.

How can I capitalize on the current state of the market? Using banks for currency exchange (I checked BofA and Wells Fargo) will destroy most of the gains I could realize. Online currency exchanges are even worse. From other people's trip reports, I've seen that using an ATM in the country to withdraw currency is usually around 1% of the spot price I see on sites like XE (less a fixed ATM fee) but that's not an option before I travel.

As I post this I suppose I'd see the same benefit if I were to purchase the currency through my broker and just held that position until I traveled and then converted back to USD and withdrew it on the same day.

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  • Roughly how much money do you expect to spend in the other country? That would give some sense of how much you can spend in transaction costs before the whole thing stops being worthwhile. Incidentally, it's my understanding that when you buy foreign currency and then spend it at a better exchange rate, you are liable for capital gains tax on the difference (assuming you are a US taxpayer).
    – Nate Eldredge
    Aug 8 '17 at 20:13
  • @NateEldredge Maybe 15k USD, so I'd be saving $3k over last year's rates.
    – Brian R
    Aug 8 '17 at 20:19
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There are some pre-paid travel credit cards around. With these you

  1. load the card in your home currency
  2. then convert it into the currency of the country at any point before you travel
  3. use the card like a normal debit or credit card, slowly spending you balance

This allows you to lock the currency rate before you travel. Since you are proposing to spend a fairly large amount of money, the cards that give you the mid-market exchange rate but with an small annual fee are probably best for you.

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