Exchange-rate impact on investment returns
Definition
With foreign assets, your home-currency return combines the asset’s price change with the exchange-rate change. A stock can rise in dollars and still lose you money.
If your portfolio is valued in zloty but holds US stocks or euro-quoted ETFs, your result has two sources: the change in the asset’s price in its own currency and the change in that currency’s exchange rate against your home currency. They can work together or against each other.
Returns multiply, they do not add up
If a share gained 10% in dollars and the dollar strengthened 5%, the return in zloty is 1.10 × 1.05 − 1 = 15.5%, not 15%. The bigger the moves, the bigger the gap between multiplying and adding.
Example: the stock rises, you lose
You buy 1 share for $100 at a USD/PLN rate of 4.00, so for 400 PLN. The share rises to $110 (+10%), but the dollar weakens to 3.50. Your share is worth 385 PLN, so you lose 3.75% in zloty even though you made 10% in dollars.
This is not just theory. The SPY ETF gained 1.48% in dollars in December 2025, but because USD/PLN fell from 3.6490 to 3.5756 over the same period, the same investment returned −0.57% in zloty.
What follows from this
- Judge your result in the currency you spend and pay tax in.
- When comparing a portfolio with an index, convert both into the same currency.
- Cash in a foreign currency carries exchange-rate risk too, even if it just sits in the account.
- The portfolio’s currency exposure tells you how strongly exchange rates affect your result.
Currencies in FundStat
FundStat shows all values and returns in the portfolio’s valuation currency, and the Daily P&L module splits the daily result into position price changes and exchange-rate changes.
Related terms
All terms- Portfolio exposurePortfolio exposure is what market factors you are actually exposed to: currencies, sectors, countries. For futures, it is measured by the notional value.
- Unrealized gainAn unrealized gain is the profit or loss on assets you still hold: current market value minus purchase cost. It moves with the market until you sell.
- Portfolio benchmarkA portfolio benchmark is a reference point, usually an index such as the S&P 500 or WIG20TR, that you compare your investment results with to see if you are beating it.
- Portfolio returnPortfolio return is the percentage result of your investments over a period. It can be simple, money-weighted (MWR) or time-weighted (TWR), cumulative or annual.