Currency Risk in Your Portfolio
When you own foreign stocks, your return depends on both the stock and the exchange rate. Here is how currency moves added to international returns in 2025 in our data, and how they can subtract too.
Two returns in one
If you buy a European stock, you effectively trade dollars for euros, buy the stock, and later convert back. Your dollar return is roughly the stock’s local return plus the currency’s change. If the stock rises 10% and the euro rises 5% against the dollar, you earn about 15.5%. If the euro falls 5%, you earn about 4.5%.
| Euro +5% | Euro flat | Euro −5% | |
|---|---|---|---|
| Stock +10% in euros | +15.5% | +10.0% | +4.5% |
| Stock 0% in euros | +5.0% | 0.0% | −5.0% |
Your return in dollars = (1 + stock return) × (1 + currency change) − 1.
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