"trust life and markets are treating you well. In spring 2009 you regularly shared your thoughts about cash positions in foreign currencies, NZD in particular.

"given the current comeback of the euro, i am flirting with the idea to switch up to 30 % of my EUR-cash into higher yielding currencies to profit from both, interest rate differential and FX upside potential - willing to accept short-term risks. any thoughts?"

David Fuller's view Thanks, and life remains a joy, as I trust it does for you, and markets a stimulating challenge.

I have long retained a cash position as a separate asset class. I have sometimes referred to this as my 'just in case' fund. On January 10th 2008 I switched my sterling into New Zealand dollars for the yield of more than 8%. I reviewed this position periodically, often in response to subscriber's questions, and toyed with investing this cash in the stock market on 21st October 2008. However I held on for the eventual NZD price appreciation before converting back into sterling on 6th October 2009.

I regarded sterling as an oversold currency rather than an attractive asset (it has almost no yield) and I felt it should firm following the UK General Election in May 2010, assuming that the Conservative Party won. It has taken the market a while to look favourably on the Conservative / Liberal Democrat Coalition government but sterling has steadied against the US dollar and many other currencies and I continue to regard it as a recovery candidate, although this will most likely take time.

I also know that I am slowly losing purchasing power even if sterling is no longer a weak currency. Therefore I might consider investing this cash in stock markets, but probably only if equities fall significantly further than I currently expect, as this remains a 'just in case' stash. My currency switching facility is somewhat limited to easily convertible alternatives via my high street UK bank but my main reluctance to switch now is the belief that sterling is oversold.

I could certainly get a higher rate in some emerging market currencies if I was willing to open an account with a foreign bank, for instance an Indian bank, but have not done this to date. Also, I am not interested in currency funds. Consequently, I am curious to know what higher-yielding currencies you are considering, if you are willing to share your additional thoughts on this subject with the Collective.