Investing

Does the price of DLR.TO indicate exchange rate?

  • Last Updated:
  • Mar 1st, 2021 8:53 pm
[OP]
Newbie
Nov 12, 2008
48 posts
6 upvotes

Does the price of DLR.TO indicate exchange rate?

I know that DLR.TO tracks the USD/CAD exchange rate, and you can exchange currencies that way. However, is there a way to determine a "good" exchange rate by looking at the ETF price?

I mean, if USD/CAD is 1.27 today, and I want to buy USD at 1.26, can I do that by placing a lower bid on DLR.TO? Or do I just have to track the rate somewhere else, then login and buy DRL when the rate hits 1.26?

Thanks.
8 replies
Deal Addict
Jul 5, 2008
1522 posts
1284 upvotes
DLR / DLR.U is exchange rate

currently 12.83 / 10.08

DLR.U doesn't move as much, it was 10.11 recently.
Sr. Member
Aug 16, 2015
788 posts
286 upvotes
Yes I'm buying dlr in tranches but not converting it since it is strictly a forex play for now and a hedge/diversifier.
Deal Expert
User avatar
Sep 19, 2004
24096 posts
5728 upvotes
where I belong
ajdedo wrote: I know that DLR.TO tracks the USD/CAD exchange rate, and you can exchange currencies that way. However, is there a way to determine a "good" exchange rate by looking at the ETF price?

I mean, if USD/CAD is 1.27 today, and I want to buy USD at 1.26, can I do that by placing a lower bid on DLR.TO? Or do I just have to track the rate somewhere else, then login and buy DRL when the rate hits 1.26?

Thanks.
As above said, DLR IS exchange rate that's why it's easy to do Norbert's Gambit (to journal to USD/CAD account)

I just set a BUY order of DLR at your desired price, say recently $12.71 (so low)
if you journal to USD and sell as DLR.U, then it doesn't matter as your rate is already locked in at 1.27 basically

If later USD appreciates, and it goes up to $13, you can sell (for CAD gains)
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[OP]
Newbie
Nov 12, 2008
48 posts
6 upvotes
Actually, to answer my own question, then yes, there is a coloration between the DLR price and exchange rate. It goes something like this:

Currently:
DLR = 12.79
DLR.U = 10.08
XE Exchange rate = 1.269

So the exchange rate is basically : ((DLR-((DLR.U-10)*((DLR*10)-(DLR.U-10))/100))/10) = 1.2687

Or more simply. Take DLR and subtract the 0.08 cent from DLR.U (add 27% exchange rate to the 0.08 cents to make it 0.10 cents) and you have 1.269

TL;DR: The lower the buy price of DLR, the better the exchange rate you get. Assuming DLR.U doesn't go up by more than DRL goes down.
[OP]
Newbie
Nov 12, 2008
48 posts
6 upvotes
shadowsteve wrote: DLR / DLR.U is exchange rate

currently 12.83 / 10.08

DLR.U doesn't move as much, it was 10.11 recently.
Or what he said.... I should have looked up. ;-)
Sr. Member
Nov 16, 2013
716 posts
203 upvotes
GTA
Is this a better way to convert USD to CAD considering in Questrade you have to pay for buying and selling. Or convert using Knightsbridge exchange on the same day.
Deal Addict
Dec 26, 2009
2784 posts
1453 upvotes
vivmk20 wrote: Is this a better way to convert USD to CAD considering in Questrade you have to pay for buying and selling. Or convert using Knightsbridge exchange on the same day.
DLR is an ETF, so buying is free on Questrade... the only transaction cost is the selling. It is slow though, I requested a journal on Tuesday morning, it didn't appear in my history until yesterday (Saturday), and I am still waiting for my holdings to be updated to show the DLR-U in my account (I'm expecting that will happen at market opening tomorrow).

FYI - The transaction was processed on February 26th with an exchange rate of 1.2606
Deal Addict
Jun 12, 2015
2265 posts
795 upvotes
Ontario
I haven't done it yet but would like to know for the future.

Can we withdraw USD from questrade to bank for free? Ie say you use this technique to get USD for USA travel vs for buying USD stocks.

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