A Brit earning weakling US dollars... advice please!

[notquitekarpov]

I am out here in Angola, on contract for a couple of years - started back last October. Things are beginning to settle down and I am starting to do some planning on the basis that it is going to work out and I will see out my contract.

It is frankly pretty lucrative - and almost tax fee - but I don't see a big queue of folks wishing they were me so think I am earning my money...

Well, I have my home leave coming up in May and the opportunity to sort out some financial affairs and I want to do some pre-thinking/pre-planning so I return as prepared as I can be. I will be taking professional advice there, so I am not looking for free advice here! I just like to come to those types of meetings with guys that know more than I do with some questions prepared and having done some thinking about options.

So, hoping some dopers can help me out here.

My problem - the weak US dollar. Where is it going next? Is there a cheap and easy way to protect myself against further likely deterioration or even find up upside?

Frankly I know I have already blown it - between when I started my salary negotiations last May/June and the time we sign in October my deal fell some 15% in UKP terms. I have property in the UK and a smallish sterling mortgage, and probably see my long future there (or maybe New Zealand where I have family). If I was smart I would have negotiated say half my salary in dollars and half in euros or sterling, but I cannot undo the past.

I know there must be currency options, or I could just buy GBPs or EUROs forward now, or maybe buy gold or other safe havens (physical or are there other ways?). Or maybe there is an investment with a big upside upon USD deterioration? I have no idea what the transaction costs are of these options or really what the full range of my strategic options are. I suspect Bush will lose in Nov but I would not wish to bet big on that - I am not particularly risk adverse (single no kids) but just trying to see if I can turn the currency risk into an opportunity.

Any thoughts or advice? No get rich quick schemes please!

[Really Not All That Bright]

I Am Not An Economist Or Market Analyst.

That said, I'm betting that the dollar/sterling exchange will be back to the usual 1:1.6ish rate within the next year or two. You didn't say when your contract was up, though.

Of course, if the current outsourcing trend continues, USDs are going to continue to drop in money markets as more and more foreign exchange leaves the country.

Why not convert what you've already made into sterling now, then gamble the rest on the dollar going back up?

[notquitekarpov]

Thanks Really Not All That Bright but "gamble" by what method?

My earnings to date I have been converting into sterlings roughly as received. If what you say is true about the current rate of 1.82 or whatever going back to 1.60 within a year or so then what I should do is keep it all in a dollar account and switch it then - making back what I lot in the downswing.

If what you call the "current trend" continues (although I would guess fiscal policy - interests rates and running the deficit - would be the driver not "outsourcing') then I should switch as soon as I get it.

I am not asking for a consensus of where the dollar is going - although happy to get your views - I am not interested in the best options open to me if I take a positive view of the dollar or a negative view (given where we are - cannot undue the past). I am inclined to the negative view - further pain - and hence my question.

My contract continues to Sept 2005 and may extend into Q1 2006 but no further.

[notquitekarpov]

Thanks Really Not All That Bright but "gamble" by what method?

My earnings to date I have been converting into sterlings roughly as received. If what you say is true about the current rate of 1.82 or whatever going back to 1.60 within a year or so then what I should do is keep it all in a dollar account and switch it then - making back what I lot in the downswing.

If what you call the "current trend" continues (although I would guess fiscal policy - interests rates and running the deficit - would be the driver not "outsourcing') then I should switch as soon as I get it.

I am not asking for a consensus of where the dollar is going - although happy to get your views - I am interested in the best options open to me if I take a positive view of the dollar or a negative view (given where we are - cannot undue the past). I am inclined to the negative view - further pain - and hence my question.

My contract continues to Sept 2005 and may extend into Q1 2006 but no further.

[Hello Again]

IAANAE (I Am Also Not An Economist) but I have observed over the years that the dollar becomes very weak in the time before a controversial election. Perhaps people are waiting cautiously to see what the future will hold. Once the dust has settled and someone is firmly installed for the next 4 years, people once again begin trading in the dollar.

I was in Britain the summer before the Bush I v. Clinton Election and the dollar was similarly weak. 1.98/pound as I recall. OUCH for the student traveler.

According to my utterly ignorant theory, the dollar would step back up after November of this year.

Take this for what it is...