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foreign currency account settlement

I asked this question a few days ago but the response indicated that the problem was not understood. Could you refer this to Scott Ryburn( hi Scott).

I operate an ASB Securities $AU account for dividends from Aust and settlement of ASX trades via ASB Secs in NZ. That situation must be relatively common with other Sharesight users, as other wise you get whacked with currency conversion charges.

I can't enter the trades without entering a $NZ conversion. Your response to my earlier question was to enter a rate anyway - that is clearly wrong as there was no conversion and if entered the system would show gains/losses $NZ/$AU that do not exist. Can't you easily add a field to ignore exchange rates for that trade?
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  • Hi Chris,

    Thanks for getting in touch, yes this is not an uncommon scenario and this question does come up from time to time.

    The bottom line is that it's not possible to ignore the exchange rate in Sharesight and there are a few reasons for this.

    For tax / accounting purposes you need to report the value of your investments in NZD, and of course for any report totals to sum the currency needs to be consistent. We suggest using the default daily exchange rate when trading in overseas currency.

    Note that just because you are trading in a foreign currency does not mean that exchange gains and losses do not exist. The way I look at it is as follows:

    1. When you transfer NZD to an AUD cash account you are investing in AUD and are exposed to exchange rate fluctuations. It's up to you whether you consider this cash as part of your investment portfolio but you can record the AUD cash in Sharesight and monitor the currency gain/loss if you wish


    2. When you purchase Australian shares via your Australian cash account you are shifting your investment from cash to shares but you're still exposed to AUD exchange rate fluctuations and should monitor this against the shareholding.


    3. When you sell the shares you have the option to recognise the currency gain/loss by converting the sale proceeds back to NZD, or you can continue to invest in foreign currency by retaining the proceeds in your AUD account.

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  • Hi Scott,

    I understand your perspective on this and it has some merit however the challenge with this approach is that FX gain/loss is masking raw capital gain/loss. For example, if I hold a stock on the NYSE and the price changes from $15 to $10 I expect Sharesight to report a capital loss of $5 per share. Instead the capital gain/loss figure is being adjusted by FX and so the non-currency adjusted movement in share price is being hidden. Can these be split into two figures or the change in FX reported in the currency gain figure rather than it just holding the effect of FX on the cost base?

    Regards,
    Dan
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    • Hi Scott - I understand what you are saying but I think it could be suggested that there is a stronger case for one than the other. My concern is that the share price change is not available independently of the FX change. I personally want to know how the share price has performed irrespective of currency movements.

      Regards,
      Dan
    • Hi Scott
      I have just signed up for Sharesight. I trade on the Nasdaq, NSE and LSE. I too would like to have the ability to retain the shares in the currency they were bought in as I run a foreign currency account.
      Apart from that I am very happy with the program.
      Regards
      George
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  • Dear Scott
    I also manage a number of portfolios in 6 different currencies on a number of exchanges with bank accounts in those currencies. Yes being able to see the performance excluding the FX movement would be beneficial. Something to consider.

    Regards

    Frances
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