International Investing and Currency

While investing internationally is important to have a diversified portfolio, it’s not likely to get any easier this year. As world monetary policy continues to diverge — in other words, Europe and Japan remain committed to rock bottom interest rates while the U.S. Federal Reserve raises ours — expect currencies to continue their bumpy ride.

Looking at volatility in the past year on the DXY index, which is a measure of the value of the U.S. dollar relative to a basket of major foreign currencies, we’ve seen an increase from 6% to 12%. And it’s becoming increasingly difficult to predict whether it will go up or down.