I am currently looking at purchasing property in Japan (which I will be living in long-term), and am thinking about entering a USD/JPY forward contract for this purpose.
The date of purchase will be one year out (March 2025), and the amount will be around 50,000,000 JPY, or around 330,000 USD at current exchange rates. I currently have enough to cover the full amount invested across stock/bond index funds. The USD has been really strong against the JPY recently, and if either the USD weakens or the JPY strengthens, that could suddenly make this purchase much more expensive. Would it be wise to enter a forward contract to lock in the current exchange rate? Would this just be an attempt at market timing? What about something like entering a portion of the total amount (say half) in order to reduce risk? Would there be a boglehead way to handle this situation?
The date of purchase will be one year out (March 2025), and the amount will be around 50,000,000 JPY, or around 330,000 USD at current exchange rates. I currently have enough to cover the full amount invested across stock/bond index funds. The USD has been really strong against the JPY recently, and if either the USD weakens or the JPY strengthens, that could suddenly make this purchase much more expensive. Would it be wise to enter a forward contract to lock in the current exchange rate? Would this just be an attempt at market timing? What about something like entering a portion of the total amount (say half) in order to reduce risk? Would there be a boglehead way to handle this situation?
Statistics: Posted by brightside01 — Tue Apr 09, 2024 2:24 am — Replies 0 — Views 92