[quote=yewkhuay,Jun 16 2008, 12:25 AM]
perhaps put in foreign FD can give much more diff.

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Putting in foreign FD do attract more interest, for eg, NZ FD gives you close to 9% a year. However, do take note on the foreign exchange spread when you convert your foreign currency back to RM. It can cost you the whole interest earned

Yes.

Basically Dual currency deposit allow you to choose which currency you want to pack with and you choose a rate, they call it "spot rate" and the local currency is called "based rate" (RM) - I might get the "terms" wrong, but the idea is there. It surely gives higher rate than normal time deposit.

So, let say u choose Sin as the other currency. The market value now is RM 1 = S$ 0.43. And you will allow to choose your preferred exchange rate. Then perhaps you choose RM 1 = S$ 0.46. U can choose your maturity period, let say, 2 weeks or 1 month. Upon the maturity period, if the market rate goes below your chosen rate, for eg, RM 1 = S$ 0.44, then you didn't get to convert. The FD rate will then be paid based on your based rate, which is RM. HOWEVER, if your rate is hit above your chosen rate, let's say RM 1 = S$ 0.48, then you get to convert. Not at S$0.48, but will be converted based on S$ 0.46 (ur chosen rate). Then the FD interest will be paid based on Singapore dollar.

So, is this good or not?

Con, normally they pay a much higher FD interest because you are exposing to foreign exchange loss. Higher risk higher return ma! So normally, ppl who opt for this, they are hoping that they don't get to convert so that they could enjoy higher FD rate that being paid based on their local currency.

However, what if you hit the point and you get converted to the foreign currency that you have no need for? Then likely when you covert back to your home based currecy, you might loss in term of currency exchange. DON"T forget you only get to convert based on your chosen rate and not the actual market rate. Perhaps should put in figure for you to have better understanding:-

Let's say you put in RM 10,000, your chosen currency is S$. So you choose 0.46 being the rate. When due (1 month later), S$ rate drop to RM1 = S$ 0.48. So, you HAVE to convert, but based on 0.46 and not 0.48. You are then given, let say 6% pa rate based on the exchanged currency:-

RM 10,000 * 0.46 = S$ 4,600.00 + 6% p.a interest = S$ 4623

If you needed convert back to RM , since S$ is of no use to you, so:-

S$ 4623 / 0.48 (the actual market rate) = RM 9631.25. See, you actually loss money!


This is very good if you do actually need to foreign currency, perhaps for overseas investment, perhaps for study loan...bra bra bra. But if you don't, you need to worry about the potential currency loss even the offered rate can be attractive by looking at it

Do check with the bank in details. The above is as per my understanding!

haha..have to. Is hard to explain it in short sentances.

Is can get quite confusion over the potential foreign currency loss...so, got to explain nicely. In case I bring you to holland ma....

Ok. I got you

thanks for the correction!

That's precisely wat i tell to say, if one have no intention to keep the foreign currency, then DCI can be risk.

It is advisable to go check with the respective bank on the terms and conditions before invest.

Tinkerbel, you are right. Bank officer might not necessary share with you all the details. I have a friend (in Singapore), losing money after converting. Best part was, she can't figure out why she loses since she is paid much higher interest as compared to normal time deposit.

Is always a good idea to check with the bank in details...for eg, once it is matured, can you opt to roll it with the converted foreign currency? keep it in the bank by opening a foreign currency acc? or simply take out the cash in foreign currency.

It might sound silly to ask these questions..but is better to have clear understanding

To me, all investments are meant for good. We only need to know the pro and con and see are they suited to our investment objective

In singapore, Standard Chartered, you can start as min as S$25k if i am not wrong. and hey, when i said cash, i meant put in current acc, not taking out as cash la