What do u mean?
WHat is LT?

Long term

So it mean If I just put in foreign FD for shirt term, it is not a wise choice?

@chgchksg128,
Not that it's not wise; U might lose on forex exchange when U convert it back to MY.

yupe, it may be not as high as it should be.
BUt malaysia currency is expected to depreciate according to some expert, just dont know whether NZD or AUD will be the same or remain the same.
Another question is any cahrges when u put it back from Forex deposite back to Malaysia FD

@chgchksg128,
Charges will incur when U convert AUD / NZD into MYR.

Foreign FD Will Be My Choice

Higher Interest Rate

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This post has been edited by SeaMonster: Jun 25 2008, 06:11 PM

@SeaMonster,
It also means greater risk

What Kind Of Risk ? Mind To Tell Me?

@SeaMonster,
I oredi mentioned; foreign exchange rates of AUD/NZD. Am not sure if banks are gonna charge a commission for that too *gulps*

I'm no banker so it's best to ask someone about this Dual Currency FD

Simple calculation, let's assume both currencies don't change value.

You put RM50,000 in an NZD FCD at 8.3% p.a for one month.

You buy NZD at Rm2.51 each, you get 19,920.81 NZD.

At the end of the month you sell 19,920 NZD at Rm2.42 each, you get Rm48,207.

You lose 50,000-48,207 = Rm1,793.

You gain (50,000*8.3%)/12 = Rm345.83

So at the end of the month, you still lose over Rm1400.

Simple conclusion : you don't make money, the bank does.

So the UOB one-month 8.3% p.a. deal is not a good one (unless of course you think that the currency is going to depreciate so much next month you'll actually end up making tons of money )

Put another way, the bank will charge you 3.58% to convert the money to NZD. The only way you will make money is if you put it in for at least one year. The one year rate is 7.70%, so you will make 4.12% per year if the currency doesn't change.

One year no-risk FD is 3.7%, so you will only make an extra 0.42% if the exchange rate stays the same. It's up to you whether you want to accept the risk or not. Just realize that you're not making like 4-5% more if the currency rate doesn't change, you're just making 0.42% more.


This post has been edited by wodenus: Jun 25 2008, 09:46 PM

If you think RM will depreciate against the targettd currency in the future then foreign FD is the place to be, yes, quite correct. You hedge against RM risk but also you exposure to the risk of the targeted currency depreciation. So it works both way so net gain or loss depends on the currency movement.


Yes, that's why it is meant for long term, one only will see the real and net effect over the long term. Short term wise, it is not advisable unless RM does depreciate significantly in short term. But currency market seldom move that big in short period of time, long term, yes, it depends on the particular currency country economy. Like Euro has risen from 3.6 to now 5.1 against RM since Euro started, or AUD has risen from 2.7 to now 3.1 in less than 2-3 years time.

One thing, commission or spread is not as high as that (3.58%), one can get discount on the counter published rate, just like counter rate today form UOB is 2.5150 2.4340, so spread is 3.3%, but if you are investing RM 50K, it is quite norm and possible to get a rate like 2.5050 or something lower eventually below 3%.

Also DCI is also a place that can do conversion to put in foreign currency FD which enable one to convert at much better rate.

Yup, it is plain not wise if one first/initial intention is only want to put 1 month FD in NZD to get the 8.3%, then convert back to RM after the maturity.

UOB OTC (on-demand or OD) rate is 2.4240. I don't think they will give you the TT rate if you're not doing a TT.



However good the rate, the difference between risk and no-risk will probably never be the 4-5% that it appears at first glance.



If there's a forced conversion they're almost cheating people already

UOB has a extra 1% charges for the banknote conversion as stated in their website.

Other bank has better rate for foreign FD compared with UOB , but i could not find any fee/charges for HLB and CIMB on their website

You all choose FD based on the rate they offer? For me, I only choose convenience. Not whether the rate high or not. Time > those tiny interest rate different

anyone know the foreign FD for mayabnk?
I can not find in their maybank2u.com.my

It seems like UOB is not a good deal

@jasontoh,
I do my banking @ Uptown so I have a whole lot of banks to choose from; they're all convenient. Also, interest rate offered is about the same unless U have large sums to put in.

like how high if you put in large sum?

Still take time. I rather do it online at home whenever I have time.

@dr2k3,
It won't b v much higher, perhaps 0.1%?! *grins*

@jasontoh,
Doing it at home when U haf the time will also need to take up time Also, there's nothing wrong with doing eFD since the benefits are the same. As for me, I like to do it over the counter because I need to transfer the $ from 1 account to another and would rather write a cheque for it