Standard Chartered and HSBC has something similar. The minimum amount is much lower.

This is how it work, using this example:
Assuming you pair RM vs AUD. Contract is for 1 week. Interest @ 70% annual interest. AUD=RM2.30 now. Target price is AUD=RM2.27.

1 week later at maturity, several things can happen:
1. AUD higher than the Target Price of RM2.27. Bank give your money back in RM plus 70% interest.
2. AUD at Target Price of RM2.27. Bank give your money back in AUD + 70% interest. Converted at 2.27
3. AUD at 1.90. Bank give your money back in AUD + 70% interest. But still converted at 2.27 because this is the contracted price.

I reckon it's a very worthwhile thing to consider if you do not mind getting back your money in RM or foreign currency (for example, you have son in Australia studying).

The way I looked at it, you can only lose out if No.3 scenario happens. But then, if you need to buy AUD right now to send to your son in Australia, converting at 2.27 is still better than converting at 2.30.

You can also enter contract form 1 week to several month. Different interest rate. Range from 70% to single digit %.

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Added on November 15, 2008, 8:28 pmSo far, the best website that provides currency charts are:

1. http://www.ozforex.com.au/
On left hand side menu, select "Long Term Charts". Date goes back maximum 10 yrs.

2. http://fx.sauder.ubc.ca/plot.html
Data can go as far back as 27 years.



Anyone know any other good site for charts?

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Added on November 15, 2008, 8:30 pmCan anyone tell me how to add charts onto this thread?

This post has been edited by Optiplex330: Nov 15 2008, 08:30 PM

Wouldn't they lose a lot of money that way ? Are you sure you won't get back the principal at 1.90 if (3) happens? and which bank will give you 70% interest, even for DCI ?

Thanks for the chart links tho


This post has been edited by wodenus: Nov 16 2008, 12:21 AM

The last time I asked HSBC, the interest can be as high as 70+% depending on term and target price. And no, that was not a typo mistake and I was shocked.

The way I looked at it, the bank can ONLY make money if AUD went down to say....1.90 and still sell it to you at the contracted price of 2.27. If 1 and 2 happens, we are on the winning side.

It has to do with the currency volatility. The higher the volatility is on that day, the higher they can give. That's why you see everyday the rate is different.
70% pa for 1 week on paper look great but it actually translate into 1.4% (which if they can offer the it means generally the currency movement on that day move more than 3% already). But still at 250K capital, you get 3.5K in one week time only.
Banks surely on winning side, no matter which way the currency goes, because it has to do with some options they are taking when customers sign out for the investment plan. The greater the volatility, the greater the more option can be gaining.

It is an investment tool for some, but not all.
It is suit to people that got intention to change the currency in the first place. It is not risk free, but it is a alternative product for changing the currency but not essential or immediate use.

Yes, but if you are not needing the money, then without changing back to RM, you are suffering on paper loss, not yet realise. Similar to buying stock at 2.27, now drop to 1.90 but you still getting the interest rate on AUD side if park the money in AUD FD, currently 5% or so depended on RBA.

Take it this way, initial you already want to change at 2.30 in the first palce. But taking DCI, you can change at 2.27 + getting 1.4% extra after 1 week (70% pa for 1 week). So whether it drop to 2.00 or 1.90, you initial decission makes no different as you alreayd made up your mind to change at 2.30 in the first palce.
Again like I mentioned, it is not risk free, it is suit to some, but not all.

This post has been edited by cherroy: Nov 16 2008, 07:39 AM

This is precisely the reason I am thinking it would be perfect for those needing to use AUD in the 1st place. Like having children in Australia studying and needed the AUD anyway.

Having said that, AUD is 2.34 right now. And I reckon it will go below 2.00, so if one could afford to wait, it still not wise to enter into this Dual Currency arrangement just yet.

Anyone want to guess how much will GBP go down to?

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Added on November 16, 2008, 8:13 amI think 1.4% for a mere 1 week is a lot of money. Normal Malaysian FD rate for 52 weeks is only about 3+%.




This post has been edited by Optiplex330: Nov 16 2008, 08:13 AM

i Tot it stated the DCI is up to 15% interest perannum......where did it says 70%??? sumore min investment 3mil? wow..

No it varies according to the forex market volatility, as you know recently volatility is unprecedental high.

Depends on banks, most banks offer min of 250k.

I knew of RM50K, 100K and 250K contract subject to some condition. Go ask around.

Anyway I calculated, even in best case conditions you'd make like an extra 10% in 5 years or so. Which is only a lot of money if you have 10 million capital

Foreign currency deposits rise as forex rates fall

PETALING JAYA: Foreign currency deposits or accounts in the country have increased after the exchange rates of several currencies dropped about 30% or more against the ringgit over the last few months, according to senior banking officials.

More liberal forex regulations had also boosted foreign currency deposits, they said.

“First, foreign currencies offer a way to protect their (local customers) cash holdings against fluctuations.

“This is especially when they have frequent or upcoming needs for foreign currencies,” Standard Chartered Bank Malaysia Bhd head of wealth management, Choong Wai Hong, told StarBiz.

Some of the needs include travelling, personal or children’s education, remittances, overseas investments or large purchases.

According to HSBC Bank Malaysia Bhd personal financial services general manager, Lim Eng Seong, the currencies that were sought after included the US dollar, pound sterling, Australian dollar and the euro.

“One of the main reasons that these currencies are in demand is for education purposes as these countries are favourite destinations for overseas studies,” Lim added.

According to production manager Kesavan Keecha, the declining value of the Australian dollar has been encouraging as he has to pay for his son’s education fees in Australia.

“The Australian dollar has fallen a lot since a year ago when my son started his studies there,” he said, adding that the exchange rate of the ringgit against the Australian dollar was 3.1 a year ago compared with 2.3 currently.

Another pull factor was the higher interest rates offered by some banks for foreign currency deposits, Choong said.

“Standard Chartered offers 4.5% to 6% in interest yields for currency deposits in pound sterling, Australian and New Zealand dollar, depending on the tenure and currency selected,” he said.

Currency speculation was another factor.

“The flip side is, of course, it also exposes depositors to currency depreciation,” he added.

Lim said the liberalisation of foreign exchange administration rules by Bank Negara in April last year had opened up the market to Malaysians.

“This has led to customers’ interest and boosted foreign currency deposit sign-ups,” Lim said.

URL: http://biz.thestar.com.my/news/story.asp?f...52&sec=business

I agree with cheroy, if you have some purpose of using the funds in the future eg. your son/daughter going to study in Australia or going for holiday, then it is worthwhile putting some funds into it as you are getting higher interest compared to local FD.

However if you just treat it as FD per say, it is not, it is more like gambling.. you don't know whether the currency will go up or down in the future.

This post has been edited by DannyOP: Nov 22 2008, 02:05 PM

Hey guys.

I'm confused as to whether I should put my money into a foreign currency current account or fixed deposit, and here's my current situation: I'm looking into purchasing NZD as it's fairly low now, because I'm planning to backpack to NZ at the end of this year. I'm merely speculating that the currency will appreciate in the future as NZD has hit the lowest ever historically against the MYR.

Sorry I'm a little new to all these, but is the exchange risk greater in foreign currency fixed deposit (FCFD) or current account? I heard that you won't be able to renew the FD automatically and you will be forced to convert at whatever rate it is, so that means I probably won't be able to "stay" in said account if the exchange rate is unfavourable to me?

Am I thinking this correctly?

You can renew at end of term at prevailing FD rate.
But the moment you want to withdraw the FD, it will be converted back to RM.
Unless you want to transfer yr NZ $ to a foreign a/c outside of M'sia, then your plan to buy NZ for travel purpose may not work...ie you will not be able to withdraw yr NZ FD in NZ hard currency.

ya, foreign currency FD is NOT foreign currency ...

in your case, you may split half of your money to this foreign FD and then another half in local FD, then probably you can manage your risk better ... sounds ok ?

depends on when you plan to travel to NZ, I don't think its coming up anytime soon ....

As requested topic merged.
Pls continue discussion here.

Hmm I see. I thought I'd be able to withdraw as NZD$, I guess that wouldn't be suitable for me then.

Hmm, I'm not sure about that. I plan to travel to NZ in November of this year.. if I'm afraid of NZ appreciating later this year, should I just purchase hard cold NZD cash from the money changers instead? If I were to do that, I just don't like the fact that I can't keep it in a safer place (ie: bank) plus earn that tiny bit of interest.

Since it's the recession worldwide, I doubt if I hold on to physical NZD, the inflation rate would affect me by much? What do you guys think? Sorry if my knowledge in the financial markets isn't really up to par..

Holding physical note in massive amount is always not advisable, as the risk of being stolen is greater the risk of the currency appreciating. Also you get none interest from it by holding physical note.

You still can withdraw the NZD, using NZD remittance to withdraw in NZ bank if your intention is to study there or stay there for long haul. But just for few days travelling purposes, then it might not be that suitable.

hi guys, need advice... i have a ton of usd in cash. instead of just letting is do ntg, is there any bank that i can put like an FD for monthly terms n get it back at usd later?

Currently those foreign currency FD/call account etc by commercial banks generally can accept bank in but cannot withdraw back as foreign currency note, as far as I know. Because Banks don't prepare those note or having those note in place all the time, that's why they don't allow customers to withdraw as note.