Foreign Currency Calculator
Use this foreign currency calculator to see how movements in foreign exchange rates affect the value of your investments. Enter your rate of return and the currency movement to see how much each contributes to your overall result.
See How Exchange Rates Affect Your Investment – Adjust the values to estimate the impact of currency movements
Investment Value
Enter the EUR/USD purchase rate to see how currency movements affect the final euro value of your investment.
- Hedged Value (€)
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- Currency Return (€)
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- Return on Investment (€)
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- Return on Investment (%)
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How This Calculator Works
Inputs
| Input | Mode | What It Means |
|---|---|---|
| Initial Investment (€) | Both (Basic & Advanced) | The amount you invest. |
| Asset Rate of Return (%) | Both | How much the asset has increased or decreased in price, expressed as a percentage. |
| Currency Rate of Return (%) | Both | How much the foreign currency has moved against the euro, expressed as a percentage. A negative value here is bad for returns. |
| Underlying Asset Currency | Advanced | The currency of the asset you’re invested in. In the case of a fund, this is the currency of the assets that the fund holds, regardless of share price currency. |
| Exchange Rate at Purchase | Advanced | The exchange rate between the euro and the asset’s currency when you first make the investment. |
| Exchange Rate at Sale | Advanced | The exchange rate between the euro and the asset’s currency when you sell the investment. |
Understanding Your Results
| Input | Mode | What It Means |
|---|---|---|
| Investment Value (€) | Both | The value of your investment after accounting for both the asset and currency rate of return. |
| Asset Return (€) | Both | The portion of your gain or loss due to movements in the asset price. |
| Currency Return (€) | Both | The portion of your gain or loss due to movements in the foreign currency. |
| Hedged Value (€) | Both | What your investment would be worth if the exchange rate didn’t move. |
| Return on Investment (€) | Both | Your total gain or loss in euros. |
| Return on Investment (%) | Both | Your total gain or loss, expressed as a percentage of your initial investment. |
Key Insight:
When you invest in assets in a foreign currency, your returns depend on two factors:
- 1The asset’s return
- 2The foreign currency’s performance against the euro
This calculator shows how these two interact, for better or worse. A strong asset return can be partially or fully offset by an unfavourable currency movement and vice versa.
Next Steps After Your Conversion
Foreign currencies, along with the opportunities and risks they present to our investment returns, are part and parcel of being an investor in Ireland. Now that you’ve seen the impact of currency conversion, here are three steps you can take to put this knowledge into practice:
Compare Investment Apps
Most investing platforms will charge you a fee whenever you use euros to buy assets listed in a different currency. This is known as the FX Fee. It will also be charged whenever you receive non-euro distributions or sell the asset in the future.
Securing the lowest FX Fee possible is hugely important to your returns. Seemingly small differences in fees can cost you thousands over the long-term.
Our Investment Apps Comparison Tool compares leading brokers operating in Ireland, ranking them by FX Fee from lowest to highest.
Did you know?
It’s possible to avoid FX Fees when using an online platform to invest. Certain platforms may only offer assets that are priced in Euros, eliminating the need to make conversions. Others may offer a multi-currency account, allowing you to top up and receive non-euro currencies directly. Our comparison tool presents all of this information front and centre, allowing you to make informed decisions.
Consider a Euro-Hedged Exchange-Traded Fund (ETF)
Long-term investing in low-cost exchange-traded funds (ETFs) is one of the best ways to invest. But even ETFs aren’t immune to currency risk. All-World, North American, Emerging Markets and Developed Europe indexes track companies whose shares are listed in a currency other than the euro. By investing in ETFs that mirror them, you’re opening yourself up to the foreign currency markets, unless of course you invest in a euro-hedged share class.
Euro-hedged ETFs allow you to invest in the global markets without having foreign currency exchange rates impact your returns. They do this by using financial derivatives known as forward currency contracts to eliminate currency risk. Our ETF Comparison Tool allows you to search for them directly.
Learn More About Global Investing
Most of the world’s largest companies have their shares priced in dollars, pounds or yen. Investing in them means taking on currency exposure by default. You can learn more about global stock market investing by checking out our Best All-World ETFs guide.
What This Calculator Does Not Include
FX Fees
The calculator doesn’t account for the FX fee your platform charges when converting between euros and foreign currencies. It doesn’t account for any other costs of investing either. These expenses reduce your actual return.
Ongoing Currency Fluctuations
The calculator applies a single currency conversion across the full period. In reality, exchange rates move continuously and compound over time.
Dividend and Income Payments
If your investments pay out a distribution in a foreign currency, those payments may be subject to currency conversion charges. This isn’t captured in our foreign currency calculator.
Frequently Asked Questions
When you invest in foreign assets, the exchange rate between euros and the foreign currency moves constantly. A hedged investment attempts to remove this risk by locking in an exchange rate. If successful, your return will depend on how the asset performs, not the currency.
The mid-market rate is the midpoint between the price buyers are willing to pay for a currency and the price sellers are willing to accept. Investing platforms rarely give you this rate. They add a markup on top, allowing them to make money on conversions.
A currency peg is when a country fixes its currency’s value to another major currency, such as USD or EUR. This is done to keep prices and trade stable. A government or central bank will maintain the peg by managing currency supply, ensuring it stays close to its set value. For example, the Hong Kong dollar has been pegged to the US dollar since 1983.
