Does the USD/CAD exchange rate matter when journaling EBNK.B to EBNK.U? or only when selling EBNK.U?
Does the USD/CAD exchange rate matter when journaling EBNK.B to EBNK.U? or only when selling EBNK.U?
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Ty Doyle · External communityPost link
External question — Personal Finance Stack Exchange
Author: Ty Doyle
Original post: https://money.stackexchange.com/questions/166306
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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i need to
journal
EBNK.B to EBNK.U
, because I need dividends in usd. but i can wait a few months! i prefer a better usd to cad exchange rate! in may 2021,
cad/usd was 1 cad = 0.83 usd
.
perhaps Donald trump will make cad and usd hit parity again.
however, i don't know if i shall sell EBNK.U any time soon. i may hold it for a few years.
when does the exchange rate matter?
(A) when i journal shares?
(b) when i sell to close my EBNK.U shares?
(c) both a and b?
i'm guessing (b), because
"The ETF can be thought of as a container."
exchange rate is irrelevant to when i ask interactive brokers to journal my EBNK.B shares?
or did i misunderstand the linked post?
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Priyanka Verma · External communityPost link
External answer — Personal Finance Stack Exchange
Author: Priyanka Verma
Original post: https://money.stackexchange.com/a/166349
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
The USD/CAD exchange rate does not matter when you journal EBNK.B (the CAD version) to EBNK.U (the USD version). When you journal, you are just moving the same shares from the CAD
side
to the USD
side
, there is no currency conversion happening at that moment. So, the exchange rate does not affect anything right then.
The exchange rate only matters when you actually sell EBNK.U (the USD shares). When you sell, you'll get USD cash, and if you want to turn that back into CAD (or need to report it in CAD for tax reasons), then the exchange rate at the time of sale applies.
So your guess is right: it is (b), the exchange rate matters when you sell, not when you journal. You can think of the ETF as a container, the currency switch only affects you when money actually leaves the container as cash.
So if you want the dividends in USD and plan to hold for years, journaling now or later won’t make a difference for FX. The FX rate only matters when you sell and convert the proceeds back to CAD.
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: Priyanka Verma Source score (net votes, not local likes): -1 Original post: https://money.stackexchange.com/a/166349 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. The USD/CAD exchange rate does not matter when you journal EBNK.B (the CAD version) to EBNK.U (the USD version). When you journal, you are just moving the same shares from the CAD side to the USD side , there is no currency conversion happening at that moment. So, the exchange rate does not affect anything right then. The exchange rate only matters when you actually sell EBNK.U (the USD shares). When you sell, you'll get USD cash, and if you want to turn that back into CAD (or need to report it in CAD for tax reasons), then the exchange rate at the time of sale applies. So your guess is right: it is (b), the exchange rate matters when you sell, not when you journal. You can think of the ETF as a container, the currency switch only affects you when money actually leaves the container as cash. So if you want the dividends in USD and plan to hold for years, journaling now or later won’t make a difference for FX. The FX rate only matters when you sell and convert the proceeds back to CAD.
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