What is the most efficient way for an individual, U.S. citizen and
resident, who currently holds U.S.-dollar denominated assets to
speculate, with up to $100,000, on the long-term (i.e., holding period
of 12 to 24 months) movement in the U.S. dollar exchange rate against
other currencies? By efficient, I mean the way that minimizes the
transaction costs of acquiring and disposing of the position in the
non-U.S. dollar assets. I have considered opening a Euro-denominated
certificate of deposit in the UK. The cost of acquiring Euro from a
retail bank (that is willing to negotiate) will likely be two percent
on the USD to EUR conversion, and likely another two percent on the
way back. I have also considered Oanda's platform. In Oanda's case,
the exchange rate is highly advantageous; however, it strikes me that
the spread between (i) the U.S. dollar "lending rate" demanded of the
investor who goes long the EUR/USD currency pair and (ii) the EUR
"borrowing rate" that Oanda credits to the investor's account is
highly disadvantageous. This disadvantageous spread between the
lending and borrowing rates could make a long-term "carry trade" in
the EUR/USD pair unprofitable. I'm looking for recommendations on the
least costly way to acquire non-U.S. dollar currency, non-U.S. dollar
certificates of deposit, or other non-U.S. dollar liquid financial
assets, in an amount of about $100,000, hold for 12 to 24 months, and
convert back to U.S. dollars.

Rydex

Good luck!
ron

HI,
What you want to do is make a forward foreign exchange contract.  Very
much simplified:  You pay a market price for the option 12 or 24
months in the future to buy  X Euros and sell  Y dollars at the
exchange rate in the contract.  You don't have to put up the principal
until the closing date of the contract, which can itself be sold on
the market during the interim.
The problem as an individual is to find a financial institute that
will accept you as a partner, since your will be obligation yourself
to come up with the principal at a future date, a credit risk.

'nuff said.  Here is one website that discusses the subject of "future
foreign exchange contracts", and you can find more by searching:

http://66.102.9.104/search?q=cache:qGAPed3tS1gJ:www.anz.com/australia/support/general/PDS-WEB%2520Foreign%2520Exchange%2520Contracts.pdf+%22future+foreign+exchange+contracts%22&hl=de&client=firefox-a