Big exchange loss in a Dual Currency Investment

Hi Mr. Tan,
I invested in a Dual Currency Investment two years ago and made a good return. Recently, the AUD depreciated against the USD. All of my investments got converted to AUD at 0.90. The exchange rate has now dropped further to 0.816, which makes the unrealized forex loss to US$50K.

What strategy should I take to minimized the loss? Right now, while waiting for the AUD to do better against USD, I have placed my money into a weekly time deposit earning almost 6%p.a.

REPLY
It is all right to keep the AUD in fixed deposit and earn 6% interest. There is a chance that it will recover, as it has dropped by more than 10%.

If you had invested in the AUD directly, instead of a DCI investment during the past two years, you would have made an exchange gain that is more than the loss that you suffer now. But, if you invested in the DCI, your gain would have been much lower.

I usually advise people to avoid DCI, as the investor is taking the risk of a loss (like you did), it was not able to enjoy the full appreciation (if the currency goes up).

Read this FAQ:
http://www.tankinlian.com/faq/duali.html