Does Currency Exchange Play a Part in Debt Consolidation?


The following guest post is courtesy of Luis Aureliano, a business writer and financial analyst. With over 15 years of experience in global finance and an MBA in economics and management, Luis’s areas of expertise include business, marketing, communications, personal finance, macro economics, stocks and emerging markets.

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The Almighty greenback is a favorite of currency traders around the world. It is first and foremost the world’s reserve currency, and it belongs to the most prosperous nation. However, many people in the US and abroad face financial difficulty. While the grass certainly isn’t always greener on the other side, there are ways to dabble in international currency markets to rebalance your financial portfolio for the better.

One of the gnawing concerns about debt is that it doesn’t go away unless you address it aggressively. Fortunately, there are many tools at your disposal to minimize the impact of debt on your day-to-day life. If you find yourself swamped with bills that you’re battling to pay, help is at hand. There are multiple debt consolidation options available to you, and some of them are rather unconventional. For example, did you know that the average American family is in debt to the tune of $134,643. This is comprised of all manner of big-ticket items including student loans, mortgages, and credit card debt.

Use the Financial Markets to Your Advantage

Fortunately, savings and debt often coexist in the same household. It is never a good idea to use your savings to pay off your debts; rather it is better to curtail expenditure, consolidate debt and work aggressively to defeat it. One of the novel ways that inventive folks are using to eradicate debt is dabbling in the international currency markets. This can be a risky proposition, and it is certainly not advisable to anyone who doesn’t have at least a rudimentary understanding of the interrelationships between macroeconomic data and currencies.

We do know a few things however.

The index which measures the strength of the USD – the US dollar index – is rather reliable when it comes to gauging dollar sentiment. The DXY measures the greenback against a basket of 6 currencies including the JPY, EUR, GBP, CHF, CAD and the SEK. You may be wondering why we are having a discussion about currencies and debt consolidation?

Currency Exchange Can Ease the Debt Burden

Well, if you’re able to understand the intricacies of currency exchange then you know how much stands to be gained by making a winning trade. Sometimes it isn’t a gamble at all. Many families have overseas holdings of stocks, commodities, or immovable property. When the exchange rate is favorable to you domestically, it makes sense to use the foreign assets to your advantage. This takes on many forms.

For example, you could use the proceeds from a sale of a property in a country with a stronger currency to pay down some of your debts and then using a debt consolidation loan to take care of the rest. Now that the GBP is weak relative to other currencies, foreigners get more GBP for their buck. If these people ride out the storm, the GBP will invariably appreciate and then that money can be converted back into local currency to help with debt repayments. These types of transactions take place on futures markets of FX trading brokerages around the world.

Would you believe that the total value of currencies traded on a daily basis exceeds $5 trillion? That’s more than the total value of all international bourses combined. The reason traders dabble in currency exchange is profit. When you’re working with huge volumes of trades where margin and leverage come into play, the potential benefits far outweigh the cons. Financial advisors are promoting diversified portfolios that include Forex as part of the mix.

The Final Word

In today’s volatile economy where geopolitical events can rapidly send your net worth into the stratosphere or crashing to the ground, it makes sense to maximize returns. With debt consolidation loans, you get the added advantage of easier management of your outstanding debt. The money that you derive from Forex transactions can be used to pay down loans into a single debt repayment oftentimes at a lower rate than all the other credit card bills, loans and lines of credit. It simply makes sense to use the differences in currency exchange rates to help with debt consolidation.

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  • WTF is this advertorial doing here? Oh wait, nevermind. 5 minutes of my life I will not get back…..unless the article writer can elaborate on how often this type of currency exchange can happen for a typical working class family. The average working class family does NOT have $100k liquid cash lying around to speculate in the markets.

    Or if the amount of the currency exchange would be enough (after fees) to make it worthwhile. What if the favored currency decreases in value?

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Does Currency Exchange Play a Part in Debt Consolidation?

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