Hey, Mustachians.
I'm a Brit living and working in Dubai, within investment portfolio offshore in USD.
The UAE dirham is pegged to the USD so for the past few years I have not had any issues with currency hedging.
However, I am about to move to Kuala Lumpur to take up a job there and the Malaysian Ringgit is not pegged to the USD.
The Ringgit has historically been around $1 = 3.25 MYR and my employment offer was agreed in USD but is paid in MYR at this rate.
There isn't much I can do about the fact the rate is below the current market rate, owing to a strong dollar.
My questions then are:
- Should I look to hedge the currency risk here?
- If so, by something such as the PowerShares DB U.S. Dollar Index Bullish ETF?
- If so, should I buy and hold (how much?), or buy up futures options?
- Should I be looking to tilt my portfolio to increase/decrease exposure to the Malaysian market?
Current portfolio is global market index funds, US corp bonds, US small caps, and REIT.
I would guess that a tilt away from Malaysia/SEA exposure might be the right idea, and something with a strong negative covariance with these might be along the right lines.
My job will be tied to the Asia-Pacific markets excluding China/Japan, so maybe there is an inverse APAC ETF that might be a decent play here?
Shorting a Malaysian broad market ETF would probably be a bad idea for a long term strategy.