A foreign investment can rise in its trading currency while losing value in the currency you spend. This calculator separates the asset return from the currency movement and combines them over the same holding period. All starting values below are hypothetical, not market quotes.
How to enter the exchange rate
Choose your home currency first. Then enter the number of home-currency units needed to buy one investment-currency unit at the start and end. A Korean investor holding a US-dollar asset would enter KRW per USD: for example, 1,300 at purchase and 1,365 at sale. A rising number means the investment currency became more valuable in home-currency terms.
If your source gives the opposite quote, invert both rates before entering them. Do not invert just one. If the asset return covers January to June, both currency observations must cover the same dates. A fund’s trading currency alone does not establish its economic currency exposure; hedged funds require their own return and hedge treatment.
The formula, step by step
Home-currency return = (1 + investment return) × (ending exchange rate ÷ starting exchange rate) − 1. Use the investment return as a decimal in this formula: 10% becomes 0.10.
Suppose you invest 1,300,000 KRW at 1,300 KRW per USD. That purchases USD 1,000 before costs. A 10% dollar return turns it into USD 1,100. Converting at 1,365 produces 1,501,500 KRW, a 15.5% return. Adding 10% and 5% would give 15%, missing the 0.5 percentage-point interaction.
When a gain becomes a loss
Now suppose the exchange rate falls from 1,300 to 1,170 KRW per USD, a 10% decline. The same USD 1,100 converts to 1,287,000 KRW. The investment gained 10% in dollars but lost 1% in won: 1.10 × 0.90 − 1 = −0.01.
For a 10% asset gain, the break-even currency factor is 1 ÷ 1.10, or about 0.9091. The investment currency can decline by approximately 9.09% before the gain disappears, excluding costs. Gains and losses are multiplicative, so a 10% gain is not exactly cancelled by a 10% fall.
What this tool does and does not measure
- The result is a holding-period return, not an annualised return or a forecast.
- Use a total return including reinvested distributions if that is what you want to measure. Entering price appreciation alone excludes dividends. Cash dividends converted on different dates require separate cash-flow calculations.
- Fees, spreads and taxes are excluded. A broker’s executable conversion rate can differ from a published reference rate.
- The simple formula assumes one initial investment, no intermediate deposits or withdrawals, and an unhedged conversion at the end. It does not calculate money-weighted returns or hedge gains and costs.
- A return below −100% is outside this unlevered model. Leveraged positions and liabilities require a different analysis.
Use it alongside the daily market archive
A dollar index return and a USD/KRW move reported on the same calendar day may have different closing times. Do not combine them automatically as though they were one investor’s realised return. First read our guide to trading sessions and daily returns. For another asset where currency changes matter, see our gold analysis guide.
Sources and method
The SEC’s Investor.gov introduction to international investing explains that exchange-rate changes can increase or reduce investment returns. Our calculator applies the currency-conversion identity shown above; the examples are constructed for teaching and use no live data. Calculations use unrounded inputs and display percentages to two decimal places. This is an educational tool, not a recommendation to buy, sell or hedge.