Canadian paid in US dollars- how can I maximize exchange rate losses?
October 1, 2013 10:11 AM   Subscribe

Long story short, I'm basically a freelancer in Canada that's about to be taking on a long-term gig with a US client. I'm getting paid in USD and I'm trying to figure how to minimizes any losses due to fluctuation in exchange rate.

Anyone else out there in a similar situation? I can deposit directly as USD (not exchanged) at my bank, so I guess my plan is to just leave it in a USD account and cash it out periodically when the exchange rate is favourable. But it seems like maybe there's something else one could do?

Or if nothing else, what's the best way to deal with exchanging a lot of foreign currency regularly? Is the best rate one would hope to get from one of those small foreign exchanges shops instead of a bank?

I'd just like to avoid taking inadvertent pay cut from time to time due to things beyond my control, like I dunno, say the entire US government being shut down.
posted by Nelsormensch to Work & Money (6 answers total) 2 users marked this as a favorite
 
The USD-CDN exchange rate is not especially volatile. There are ways for large companies to hedge echange rate risk with swaps and other derivatives but there is no practical way for small businesses or individuals to do so.
posted by dfriedman at 10:26 AM on October 1, 2013 [1 favorite]


Best answer: When I was paid in Japanese yen I had to send money back to Canada to pay student loans.

I paid attention to trends, rather than events (like the shutdown). Although no one can predict the future, it doesn't seem like the greenback is going to continue to weaken.

It seems like the Canadian dollar is going to remain slightly stronger than the American dollar.

The way I approached it, since I don't like trading in currency (what a nerve-racking hobby), I just looked at three-month trends.

When I got paid, I also tried to take a look at trading behaviour during the week, and tried to predict during the week when the exchange rate (in terms of the week) would be most favourable.

I can't really see the Canadian dollar taking off, though. Although there is the perception we are doing better than other parts of the world, the economy is not red hot.
posted by KokuRyu at 10:26 AM on October 1, 2013


Best answer: Depending on leverage with company, you could add something to your contract to the effect of that a devaluation of usd vs cad of more than 5% will result in your salary being increased accordingly
posted by cacao at 10:38 AM on October 1, 2013


Your losses are likely to be minimal at best because there's not much volatility. The best way is to get a USD bank account at your Canadian bank and transfer when CAD is weak.
posted by jeather at 10:40 AM on October 1, 2013


Best answer: Actually, more realistic is that you ask to be paid in cad, and if not, to be paid 5% more for taking on the forex risk
posted by cacao at 10:40 AM on October 1, 2013 [1 favorite]


Response by poster: Heh, I guess I'm still remembering the days when I was able to pay off my US student loan when it was about 1.15 CAD to USD and saving a couple grand.

I'll see if I can work something into the contract and take it from there.
posted by Nelsormensch at 2:35 PM on October 1, 2013


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