As a U.S. citizen, can I purchase foreign currency & invest or receive interest on those $ in a US account?

Question

Can I buy euros or yen for ex; in a US brokerage account? Or can I only hold the foreign currency in cash? How can I protect my US cash from being de-valued other than to buy foreign ETFs, foreign stock, etc...?

I DO want interest or to invest as the currency (not US dollars) and receive capital gains or dividends as the currency I've purchased. The whole futures arena seems scary but I haven't studied it much. I guess buying and holding a currency IS investing in it's future value so same thing, huh? And I'd prefer to keep the $ in a US bank or brokerage...Thanks for the ideas, I'll check them out!

Answer 1

Stay away from FOREX firms in the US, they charge a fortune and are not very reputable.

Currency exchange in the US is actually a bit expensive, but what you can do that is a bit cheap, is go to www.etrade.com and open an account that includes futures. You can buy foreign currency futures, but I do have a question for you, why do you want non-interest bearing currency?

Have you considered either buying short term foreign bonds in the bond market, short term foreign bank deposit accounts directly from foreign banks or a short term bond fund that is a non-US fund only? They are good alternatives

Answer 2

I think your best bet is HSBC.
I contacted them about starting an account in another country with USD without going to that country. My real intent is to convert my USDs to their currency and hold it in the other country's bank system. I have to get more specifics on the matter, but I was given a link that told me of an account system where people can hold several currencies in the account. I'd give the link, but it is other nation specific.
If they offer this type of account in the other country, it is likely that they offer a similar service in the US. The name of the account in that country is Foreign Currency Savings or Mult-Currency depending on how the person wants to diversify.
If you do a search for an email address, you should be able to avoid calling the non-tollfree number in Buffalo or you could try calling a local branch.
People have lots of thoughts on how to preserve their money from devaluation, and like the stock market, there just isn't a sure thing. Past performance does not guarantee future results, though the trend is still your friend.
Good Luck.