best currency for future plan

Depends on where they are going.

Correct. Where are they going?

Thanks to all. Going to the U.K.

Euro.

I would go with Pound Sterling or Euros

Remember there is a phenomenon called 'interest rate parity', described at

in better detail, but the bottom line is all 'anticipated' movements in exchange rates are accounted for in the differential in interest rates on a given set of currencies. So a present value of Euros or Dollars will grow by the same relative amount due to the different rates of interest those currencies attract. I trust you are not suggesting holding euros under the mattress, but in a euro denominated short term note, correct? JOE

But then they are exposed to the Euro/pound rate, which can move around quite a bit.

Pounds would be better.

Another factor is they *must* shop around for the best conversion rate and commission, and do this only once.

The cost of converting can be up to 5% of the money transferred (you have: foreign exchange commission, bank transfer or wire charges, bid- offer spread on buying foreign currency-- just to name 3 costs).

So you only want to do this *once*. To minimise exchange risk on Yen/ pound, they might split the transactions into 2 (one now, say, and one in 6 months time for the other half). This might cost them a little more commission, but reduces the chance of the Yen moving up against the pound and a lost opportunity for them.

If they are going to live in the UK next, they want to convert to pounds.

If they are going to the UK, then they should save in pounds. That way they minimise the risk of currency losses. Any other strategy, the currency losses can easily wipe out any gains from a higher interest rate.

Who knows what the pound/dollar, pound/euro or pound/ yen rate will be in 12 months time?

You should be able to get around 5% on a good UK savings account. Note unless it is 'offshore' then 20% of interest paid will be withheld at source (UK tax law).