PB Foreign Currency Fixed Deposit
http://www.pbebank.com/en/en_content/perso...content143.html



Our PB Foreign Currency Fixed Deposit (FCY FD) Account enables you to :

* Earn potentially higher returns
* Enjoy additional interest rates of up to 1.0% p.a.

The additional interest rates is over and above the counter rates for all types of FCY FD Accounts as follows :

Additional Interest
Rate (p.a.) Tenure Period
1-month 3-month 6-month 12-month
1.0% 0.5% 0.3% 0.1%


1. Open to individual and corporation accounts.
2. Minimum deposits of RM10,000 or its equivalent in foreign currency in a single receipt.
3. Deposit and withdrawal in foreign currency notes is not allowed.
4. Eight type of foreign currencies to invest in, namely US Dollar, Pound Sterling, Australian Dollar, New Zealand Dollar, Singapore Dollar, Japanese Yen, Euro Dollar and Hong Kong Dollar.
5. Upon maturity of the FCY FD, it will be renewed under the respective prevailing FCY FD interest rates, ie. counter rates, without additional interest rates.
6. Rollover of existing FCY FD funds are not eligible for the additional interest rates.
7. The promotional rates apply provided that the FCY FD is held until maturity. We reserve the right to change the promotional rates and the foreign currency fixed deposit interest rates without any prior notice.
8. There is an inherent exchange rate risk in foreign currency deposits.
9. The opening and operations of the FCY FD accounts are subject to the guidelines under the Exchange Control of Malaysia (ECM) Notices and Bank Negara Malaysia.
10. Other terms and conditions apply.

Looks good as alternative to local fixed deposit, right?

Difference between buy and sell price too big. For AUS dollar comparison. Have to wait a few months at least to start getting money

i don mind trying if hav extra cash flow...but too many funds being launched....

Also locking in your money long term is risky... suppose something happens to the country your money is denominated in, you can't take out fast enough + you'll lose all interest.

This post has been edited by wodenus: Jun 7 2007, 12:36 AM

hi guys...actually really interested.

What are the cons? got some kind of management fee? got what kind of fee charges?

i think anything that offers better than malaysian 3.7% either short term (1yr) or long term is a good risk to take. risk however since this is fix deposit we are talking about, should be minimal.

please TS, explain the risk! im potential buyer!

i like public bank....earn me lotsa money d...

in public bank i trust. kekekek

The FD risk is minimal, but the exchange rate risk is not. If you put US$1000 in, you will get US$1000 + 6.15% = $1061.50 at the end of one year. The thing is, what's $1061.50 going to be worth in RM ?

Suppose at the beginning of the year you put in $1000 when US$1 = Rm3.80. So you actually put in $1000x3.8 = Rm3800.

At the end of the year, let's suppose that the exchange rate is now US$1 = Rm3.00. When you take out after one year, your $1061.50 will be worth $1061.50x3 = Rm3184.50.

So basically, if this were to happen, you'd actually lose Rm3800-Rm3184.50 = Rm615.50 after putting your money in FD for one year.

You see how you can lose money in foreign-currency dominated FD now ? it's not risk-free. It all depends on whether the currency goes up or down.

Have you really stopped to calculate how much money you really made ?

This post has been edited by wodenus: Jun 7 2007, 12:50 AM

I think most of us know about the currency risk exposure. Well if you really want to reduce your currency risk. Have a basket. Take up maybe 5 different currency exposures. But I am uhm.. against taking US$ as part of my basket so make it 3 or 4.

I actually feel this might be a good place to put your money if there is low or no mgt fee & minimum transaction costs or other fees. I think it might be a slighter better option than putting in funds provided is low mgt fee & transaction cost.

This post has been edited by Lcsx: Jun 7 2007, 08:14 AM

to me, this is a bad investment, as both the interest and exchange rate are in op risk, if we invest in 12 months tenure. usd, pound sterling and euro are about at their peak interest.

exchange rate is too risky as we do not have the control to put long or short over the currencies we hold .

as what one of the forumer indicated, his calculation is very clear to show us the risks that we need to take.

lastly, bank never make loss profit business. just my opinion.thanks

there is already a discussion on this topic last week.

http://forum.lowyat.net/topic/465571

well, i think this topic is more specific into this PB foreign currency FD..
anyway, thanks for informing about tht topic..

Cannot say it is bad or good, it depends on situation and individual financially as well as needs. If you treat it as speculation like share or short term speculation, surely it is not the way to do it instead one should treat it as to protect/hedge against ringgit depreciation which in the mean time get some extra yield.

For example, I am going to send my children to overseas studying in few years time (let say Australia), instead of save in ringgit FD (since no stock or UT anymore, needs to be secured) that yield only 3.7%, I can opt to convert first to AUD then put in AUD FD that yield 6.25%. When my children needs it time, I can just straight away take out the FD in AUD and do a AUD remittance to pay their college fee there.

after several years
Three scenario:
1: AUD appreaciate against ringgit - I save more while getting more yield from it.
2. Exchange stay at same - at least I get better yield for several years already about 2.5% compound interest more.
3. AUD depreciate against ringgit - At least I don't have to fork out more although I lose a bit, but children education fee is more and less secure.

You gain 2/3 chance in this way. But bare in mind, you must at least know that your invested currency is strong and the particular country's economy is healthy which provide strong support to its currency.

In this way, I won't need to worry about ringgit depreciation in the future that happened like 97 that a lot of parent suddenly found their saving previous is enough for their chidlren education overseas suddenly with ringgit depreciation then struggling to find extra money to fund their children, some even has to cancel their plan to study abroad at that time due to ringgit depreciation.

I don't think anyone here is going to invest in USD FD. Also the British interest rate is on the uptrend these few months not down. It is expected to increase further in the coming months. If we are looking at 1 year only I think its pretty good. Besides, isn't FD supposed to be fixed rate rather than floating? so I don't think there is any interest rate risk here.

Also if you hold all 3 NZ, Aust and pound basket. I don't think the fluctuation in 1 year will be that signifcant. I believe this risk would more than justify the ~4% premium against our FD.

But yeah, nvrtheless it is a risk.

This post has been edited by Lcsx: Jun 7 2007, 02:06 PM

It is same as normal local ringgit FD, if you put 1 year 6.25% then the interest rate is lock in, no matter what happen on the interest rate front in this one year.

With current economy and financial situation, among the currency, USD is the poorest, no doubt about it.
Interest risk is not much considered that ringgit interest rate is expected to drop a bit, there is rumour that BNM want to cut 0.25% in the near future.
Only exchange risk which needs to monitor from time to time.

This post has been edited by cherroy: Jun 7 2007, 02:22 PM

I'm interested in this foreign currency FD and a potential investor. However, I would like more infos about this investment:

1. Is it works like FD with fixed interest?

2. Is it auto-renewable?

3. Could you elaborate further about additional interest rates of up to
1.0% p.a

4. Any additional charges like annual management fee or trustee fee?

Tks

1 and 2 : It is exactly as same as local ringgit FD.

3. No fee or charges incur except some banks do charge some management fee if the foregin currency FD account balance below 10,000 something like that which varies from banks to banks (some banks do charge if below minimum, some don't, check with your respective bank)

What's the meaning of "Rollover of existing FCY FD funds are not eligible for the additional interest rates." ?

Sure if you have a reason to use it in the native currency (studies or overseas investment or whatever) then it's a great idea. But if you're just thinking, I want to make more than FD, then you're just speculating, which is not something you want to do with FDs I think.

Well it all depends on your risk and return needs. Those which are willing to take a slight risk and don't want to risk losing purchasing power from inflation might want to take up something slightly higher than our FD rate.

Also for those who believe perceive that the stock market has peaked but still want to invest and don't have many good return venues might want to op for this too.

And for people like me who hate putting their money in funds and might be constrained from active stock management..... also might want to put their money here also.

But of course diversity is they key to minimize risk so don't dump everything you have in this basket. Oh yeah, people who might want to diversify further might want to dump their money here also.

I dont think it works as you all expected. From the information i have, the money in the FD will be converted back to RM once it's matured.

I have put money in NZD FD from HLB a year ago at bank sell rate of MYR2.3/NZD ... now the bank buy rate is about 2.5. The interest I was promised was 7.1%. I checked the other day after consideration of the currency exchange, I have gained 12% per annum.

All I have to say is that, you have to buy in at the right time, not simply buy ... for example NZD and AUS now are so high, if you expect it will still grow, then you can go ahead with it, else ... don't buy when it's high.

Furthermore, always have to consider the buy and sell rate in your calculation.

This post has been edited by p4n6: Jun 8 2007, 12:35 AM

Yeah, it's not something where you can just put in and forget about it for two years or whatever. If you know when the exchange rate is low, and when it's high, then you can try it. You can make a whole lot more than FD, but then you can lose a whole lot more too.

This post has been edited by wodenus: Jun 8 2007, 11:15 AM

pls kindly correct me by saying this is a bad investment, which i did not mean it. appologise...what i am trying to express is it might not be as good as what we predict.

Only PBBank impose that rule, for others bank, you don't have to convert back, you can renew or withdraw in foreign currency or convert to other type of currency.

hong leong bank do the same as pb bank by converting back to myr when matured. so, are u missing another bank ? i am 100% sure about this at hong leong bank,cause i tried before...

Which bank do you mean?
As far as i could recall, only HLB and PBB currently have foreign FD deposit.
I was thinking to put 1 month FD to minimize the exchange volatility. Any comment?

Well thing is few people really act as a contrarian when a thing is low sometimes.

Well lets take Ringgit USD for instance. Ringgit was on an all time high a short while ago since the market crash years ago. But how many of us betted US against the ringgit at that time?

Well honestly I wouldn't be so daring to bet the US against the Ringgit myself despite it being very low.

Well another case is, would you short the Shanghai index futures (China) when it is already very high?
I would hesitate too.

Well really not critisizing or anything. Just indicating it is hard to "take a position" when it is high or low sometimes.

But generally people/we do "get out of the position" when things are too high and do "take a position" in stocks when they are low but fundamentals justify buying it.

This post has been edited by Lcsx: Jun 9 2007, 02:28 AM

citibank got foreign fds also, but if not mistaken, can renew upon maturity. Not sure if can redraw in that currency tho...

Most banks especially foreign banks got foreign currency FD now, just some don't actually promote it so unknown to public.

I don't know about HLB also impose such rule, if they really do, better avoid since we don't want it to be converted back, it is mean for long term investment and diversification, also it is against you to make decision when to convert back, we only want to convert back when it is high.

I know Citibank, UOB, S.Chartered, you can auto renew it.

Yup, it is hard to take any position exactly correct but you can roughly know it is at high or low, just like Shaghai stock market, you knew it is too high but you can't predict when it will collapse so at that time, avoid it since soon or later it will go down in near term since it is unsustainable.
Just like GBP, without further increment in interest rate, it is a bit difficult to see is cross the level significantly of 2.00 GBP/USD. Also Ringgit will find difficulty to go beyond 3.35 with USD in near term since ringgit interest rate is going to be lowered also it will significant hurt Malaysia export industry if ringgit appreciate too much

You don't need to buy at lowest point, only avoid the highest or look for a bit low will do. The primary purpose investing in foreign currency FD is not mean to speculate or gain from exchange rate solely, the idea to to diversify your asset/wealth and protect/hedge against your ringgit if anything happened on ringgit front.

As i know for PBB FCFD you do not need to convert back at maturity, it can be auto renew.

Its just that right now PBB offer additional 1% & PBB system will only auto renew FD at normal rate, hence if you under promotional rate for the 1st maturity u will need to go to the counter to do the renewal manually.

For withdraw the foreign currency or convert to other type of currency, this are something like forex trading not a foreign currency deposit. Can u tell me which bank are provide this kind of services?

Presently if u 1 to TT or transfer the foreign currency to local or foreign bank, u must have foreign currency current a/c or use the MYR to convert.
Do the bank accept us using foreign currency to do the TT/Bank Draft?

This post has been edited by Kantao: Jun 24 2007, 01:35 AM

I knew a foregin bank which I familar with, they can do that but not sure on others, mostly foreign banks can if not mistaken, local banks rules on it might be varied.

1. For this PB FC FD, you are practically assured of the rate of return depends on your Currency FD placement. The only risk is the FOREX.

2. Foreign Unit Trust, you are exposed to FOREX and Market Risk.

3. Local FD - assured of the rate of return.

4. KLSE - Market risk.

Which is better? Depends on your own appetite risk.

may i know which foreign bank u familar with it? Citibank, Standard Charterd, HSBC or Dustche Bank?

Have u dealing the foreign transaction which no involve MYR with them b4? like used USD to TT or bank draft to other party in USD.

How they charge u? Only bank service charges(normally is RM25+) or have forex exchange charges inside? 10s.

I had asked the RM (relationship manager) of UOB, Citibank and OCBC, they can do it but charges don't know, haven't made before.
Don't think have forex charges if your FD is in USD and remit or TT as USD, not 100% sure, better ask them.

10s 4 info. wll try to find out.

the issue now is, when your foreign fd matured, can u withdraw the sum of money in the foreign currency that u deposited. u do not need to convert back to myr and convert back to the foreign currency again when the money matured.

the rules of the game is -
1. if u wana deposit into australian dollars, u have to bring a bag of malaysian cash (malaysia currency) to the bank. the bank manager will convert your money into australian dollars. from here, ur interest begin.

2. when ur money matured, for example, after 1 month, if u think u wana reinvest into this kinda fd again, u can auto renew, there is no need to convert the aud to myr and to aud again....

3. the last and big issue here is, when ur money matured, u are not allowed to withdraw the money in australian dollars not, the bank will auto convert the aud into myr depends on the day's conversation rate......

if the bank allow the investor to withdraw the cash in the foreign currency, i will be the 1 to first q up in any bank that offer this scheme....

lastly, bank will not do a business that do not profit them.

---

Added on June 26, 2007, 2:25 pmcherroy, which bank do such a good stuff ????? can u pls let me know....i am ready to q now with cash ready.

This post has been edited by a6meister: Jun 26 2007, 02:25 PM

Ask UOB or OCBC about it. I am not banker so whatever my answer can't be the ultimate.
But I do ask them before about it, they said no problem if I withdraw the FD and remit the money to overseas.

This post has been edited by cherroy: Jun 26 2007, 03:10 PM

I just saw a new product on the market. Dual currency FD. Interesting....I wonder whats the actual risk-adjusted return should one anticipate from these products ?

to remit the currency to oversea country ? so, that mena, i will need to open an acount in hsbc, royal bank of scotland or any uk bank if i deposit the fd into gbp ?

honestly, i dont think it make sense.

bro,

this product, minimum investment RM250k la.. check out the fine print

or you can treat it as another type of investment that hedge against Ringgit depreciation while gaining extra interest from it.

If you solely look for the interest rate differential gain alone, it is not a place to do but should treats as protect against Ringgit depreciation which is the primary objective of the FD and also for your asset diversification.
If solely look for interest gain then put in Turkish or Brazil currency which are better since interest rate is more than 10%, but this kind of currency is vulnerable so won't be an ideal choice of asset diversification.

That's why banks only offers those much stable currency like AUD, EURO, Yen, GBP, SGD and USD. (USD is one of the weakest among them for time being due to huge currenct account deficit.). It is mean for wealth diversification rather puttting all your money in one basket (ringgit).

For example, if you put AUD at the beginning of the year at Rm2.70/AUD (if plus the commission or charges, you changed it at RM2.73-2.74 while getting 5.9% (1 month). Now, with AUD/Rm2.91 with exchange lossesor commission, you still get at least Rm2.87 from it while gettting extra interest rate from it.

It is not mean for you to speculate and gaining from the differential interest rate rather as asset diversification and protection against Ringgit depreciation if anything happened on Ringgit.
Keep on changing currency, just mean more commission for banks only while you are making a loss from the exchange commission. Generally, you put it as long term investment, just monitor the particular currency movement and their economy situation, if nothing wrong, then just treat it as long term investment.

A lot of people learned this from 1997 crisis. It is not harm done to diversify your asset/wealth.

This post has been edited by cherroy: Jun 26 2007, 06:07 PM

is TS a public mutual agent? (or a public mutual fan?)

Anyone know about foreign FD?

Have to be wise, if not, cry also will be too late

Can you share more?

Merge the topic with previous discussed, check it out.

Thanks...It has been dead awhile...
Can anyone tell me which one better? Local FD or foreign FD?

Can't say which one is better...it's like comparing a green apple to a red apple.

Local FD = no risk, you place a 1 year 3.7% FD and you get 3.7% interest at the end of 1 year.

Foreign FD = expose to currency risk, you place a 1 year 5% FD and you get 5% interest +/- x% forex gain(or loss).

In other words, foreign FDs are more risky because of the uncertainty on the absolute return you could obtain.

I wondering whether overseas FD investment worth it or not. Since now 1 GBP = RM6.5 which is very low.. Is it advisable for me to convert some money to GBP and save it in UK banks in forms of FD?

The question is keeping in UK banks will my money be taxed?

The reason I choose this form of investment is cos it's the least risk free investment I see after keeping in FD in M'sia which is only 3.7% > < Very low. And I'm not a bumi so I can't invest in those Amanah Saham. Even unit trusts have it's risks.

Normally if we convert RM>USD>RM
how much % have we lost in the conversion process?

For counter rate around 2-3%.

If for large sum through structured product, one can get as low as 1%.

According to public bank's website, there's a new campaign to save in foreign currency in FD form. As i might be studying in Australia few months later, i am thinking is it worth to participate in this campaign, any advice from the gurus here?

http://forum.lowyat.net/index.php?showtopi...6&hl=PB+Foreign
http://forum.lowyat.net/index.php?showtopi...7&hl=PB+Foreign

Anyway since you're going over to Aussie, once you reached there; just open one FD account there. I'm sure there's something for student FD.
If you invest it via PB, you'll be loosing out on management fees and currency exchange.

Hi caspersky, since you'll be going there to study, are you planning to keep your money invested for quite some time until you return from studies?
Australian dollar is a good currency, and may appreciate further, but we won't know because we're not experts in this field. Everything involves risks.
As b00n already mentioned, it is better if you take your money over and save it in the FD there.
I lived in Australia the past few years, and one bank there is paying reasonable interest.
It is known as ING bank (not related to the insurance ING ), paying over 6% even for savings if I am not mistaken because I still have some money there and still receive updates from them.
Whatever you would like to do, please do a thorough research and understand them first.
Look at your needs and invest accordingly.
One word of advice is, never only rely on other's opinions, do a due diligence yourself too

Regards,
Alan

There was once we were discussing about this matter in public bank when we saw the flyer(the paper whatever it is)
Then we were discussing half way an irritated aunty(she's definitely angry with the public bank for unknown reason) tell us quite loudly(I'm sure the customer service girl can listen as well) that this is just bullshit as after all the fees we'll be losing our money instead.
So ... up to you to believe or not, but I do believe as this is too good to be true

no point to keep in local bank, you cann't use them as foreign currency ... meaning you cann't withdraw them as AUD in Australia ... when withdraw the money, it converts from AUD to MYR, then again MYR to AUD, you could lost as much as 15% there ...

just open FD in Australia now ... no need to wait till u go there ...

I don't think this can be done, because when I wanted to open an account there, they need your identifications.
You need to either be a PR, or at least a student/employee there.
Should have some sort of permit to live there in order to open an account there if I remember correctly.

I just opened on foreign currency account with UOB Bank last week.

I don't know Pbbank case on the foregin Forex FD issue, but other banks allow you to withdraw in AUD in the form of remittance or bank draft. This one I am quite sure about it but don't Pbbank allows or not as it depends on individual bank policy.
But no cash withdrawal is allowed, that's for sure.

Let's say you put RM10,000 for 1 year in Public Bank Foreign FD,you must take the money out after 1 year regardless of the currency fluctuation, meaning you cannot just leave the money in there and wait for a better exchange rate, they will automatically change it back into RM for you then wait for you to go and take the money. You cannot do auto renewal.

This is what i was told around oct 2007 by Public Bank.

I don't know about Pbbank case, but others bank I deal with has no problem of renewable either 1 month or 1 year, you can put there 10 or forever years without changing back until you wish to.

If any bank force the customers to change back after mature then no good at all.

This post has been edited by cherroy: Jan 25 2008, 02:05 PM

thanks for the reply. i think the '*' really implies something that we should be clear before dumping money into it. i didn't know we Malaysian here can open FD in foreign bank, is it possible?

You can't open at Malaysia with foreign based banks like Barclays or ANZ bank in Australia, you need to go to overseas to open one.

This post has been edited by cherroy: Jan 25 2008, 02:10 PM

FOREIGN CURRENCY FIXED DEPOSIT from CIMB Bank

TURBOCHARGE YOUR MONEY.

1 day fixed deposit - the fastest fixed deposit ever. Get your returns within 1 day!

1. Start with a deposit of as low as RM10,000 equivalent.
2. Invest in foreign fixed deposits and earn interest as high as 8.60%p.a.*
3. Terms and conditions apply.

For more information, call 1 300 880 900 or visit www.cimbbank.com.my. Bank on us to see beyond.

http://www.cimbbank.com.my/pdf/191207_Fina...Star37x26.1.pdf

we cant do online thru cimb..we need to go to bank and do fd thing..unlike local fd can staright go thru online...

Well, other banks also the same I guess for foreign FD.

i had invested RM 100,000 in PB's NZ Foreign FD? so how can i check whether i earn more or less base on the exchange rate?

Your interest rate is fixed, so what will affect your return (net gain/loss) is the exchange rate of RM/NZD only when the FD matured. (You can also withdraw in half way of the FD tenure, but you will not be paid the interest).

So if you opt to not exchange back the NZD to RM when it matured, you can auto-renew it. So whatever exchange gain/loss still remain as paper gain/loss while still receiving the interest of the FD.

This post has been edited by cherroy: Jan 28 2008, 02:15 PM

Any expert in Foreign Currency Fixed Deposit?

i observe the rates, it was pretty good. and the CIMB can give you the daily rates. Daily might give your less money but it is more flexible.

And, i think, this Foreign Currency Fixed Deposit will not lost your capital and you can cancel the services if anything bad happen.

Can anyone enlighten me?

or, show me some related link?

must be careful with conversion only

cause u always buy the currency at a higher price compared to when you sell it, need to know how to cheong at the correct time

CIMB worker told me not o buy. as his friend bought rm20k and they already lost rm3k for the currency rate

foreign curency FD is long/medium term investment......if you "trade" foreign currency with bank of course u lose

lost? i thought Foreign Currency Fixed Deposit is very hit now. how come, it can make a lost?

if buy the aus or NZ, the rate should be very stable, right?

The slippage between the buying and selling rate is about 2.5%-3%. When you place this FCFD short term (<6 months), you currency has to appreciate for you to make money. Otherwise you will lose. If the FD rate is 7-9% and you place 6 months (3.5%-4.5% for 1/2 year), and assuming the currency is about the same as when you bought it, then you make a little.

Worth it? I don't think so.

It is not a place for one to speculate but to diversify your asset.

the CIMB worker tell me not to buy too. He says, it is just advertisement, in fact, you wouldn't much earning

IC. ok. got it. tks a ot

lol...weird....how come CIMB own staff spoil their own company business

Maybe the just don't like the work hassle for the need to filing up forms and also need to contact the other side.
And his advice is also make it a point whereby you don't make much also.

This post has been edited by dplaya: Apr 16 2008, 09:38 AM

If a bank of company has too many of those kind of employee, then I would fear about the company future.

well i think the more the better. why because the copmpany acutally showing the truth to the customer, if the customer want to take the risk then go ahead.
they say usaully this unfd are later trasfer to oversea and not use for lacal

I put in NZ$ st 9% and AUD at 7.25% . The slippage between buying and selling is about 2.5 %. Assuming currency remains constant it is still more than double local FD rates after 1 year. So you have some forex exposure which can go either way. But I think NZ and Oz are relatively safer than Ringgit lor..

In Most of the local bank, once the FD matures, it will convert back to RM. So in the end, Banker's win we lose.
Why?
They will be the one earning the spread between buy and sell.

I calculated 5 year returns (oanda.com has historical prices) -- turns out you lose about 25% in 5 years with NZD. So annualized it's about 5% loss per year. If we assume interest rate is 8.5% p.a. we're looking at a real interest rate of about 3.5% per year, and that's before slippage.

Not worth it if you ask me

I don't know about local bank, but those foreign banks like Citi, Standard Chartered, OCBC etc, you don't need to convert back, you can auto-renew it until whenever you wish, be it 1 month ot 2 months or 1 year.

Therefore, it is a place for one to diversify FD money, but not a place for one to gain little bit extra from the interest rate. Instead put all FD in RM, one can put in AUD, NZD, GBP, Euro to hedge against potential RM depreciation.

---

Added on April 16, 2008, 4:34 pmI think you get it wrong already. (or should be the other way round, as Rm does depreciate against NZD about 20+%)

Around 2003, NZD was trading at 2.05-2.22 range. Now NZD is 2.50 currently. If one put NZD 5 years back, one actually gain through NZD appreciation plus interest earned.

RM is actually very poor compared to all major currencies except against USD. Don't be fooled by RM appreciated against USD from Rm3.60 to 3.15 currently, it is mainly because of USD plunging not because of Rm appreciating. In fact, RM is actually depreciating against major currencies like Yen, Euro, AUD, GBP even NZD.

This post has been edited by cherroy: Apr 16 2008, 04:42 PM

Okay this is how I calculate :

Say capital 50,000.

I'm using the price history from March 1 03 to 16 Apr 08.

The lowest conversion rate is 0.35370, so if you convert you get 50000x0.35370 = 17,685 NZD

Now let's invert the exchange rates and look at the price history again.

The lowest conversion rate is 2.04420, so if you convert you get 17,685x2.04420 = 36,151.67 RM

So net loss = 50,000 - 36,151.67 = 13,848.33 (27.7%) or about 5.5% a year annualized.

Interest is 8.5% p.a so net interest is 8.5 - 5.5 = 3% p.a.

What am I doing wrong here ?

I dont know how u get ur rates.
But mine from Yahoo finance shows
1/04 - 0.47

4/08 - 0.40

1/04 - RM1 = NZD 0.47 you bought
4/08 - RM1.175 = NZD 0.47

How can you make losses?

Go to oanda.com -- it's in the FX history section. Yours is not so valid because you randomly pick two days. Mine is a worst-case situation, you pick the two lowest conversion rates.

Friend, you are mess up on this case. The lowest 2.04420 is during 2003 time. Now is 2.50. So you only lose 25% if you are origin of NZD aka mean you convert your NZD to RM at 2003 and convert back to NZD at present time

For simple scenario,

On March 2003, if you have RM 50K, with the rate around 2003, let say you manage to convert it at 2.10 (2003 was traded and hovering around that price), you get NZD 23,809.
Then if you keep for 5 years. now with NZD rate at 2.50, if you convert back to RM, it will be 23,809 x 2.50 = 59,522.

So you gain RM9,552 on your RM50K
It is not taking of account of interest rate you gain during this 5 years.

Don't get me wrong, I am not promoting foreign currency FD, just to clarify the issue.

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Added on April 16, 2008, 5:39 pmNo wonder you lose on your calculation. He is valid also, as he doesn't pick extreme case or exchange rate. Exchange rate move is gradual over the time, it won't spike out and down quickly in one or two days time. Just like it takes years for NZD to go from 2.10 to 2.50.

Worst case scenario you mentioned is like I said before, you are a New Zealand person take NZD to convert to RM when 2003 time and keep for 5 years and convert back NZD at present time. So putting RM FD for the NZ person will yield as you mentioned, lose 25%. But not the other way round, for a Malaysian to put NZD FD.

Yes, you can lose out in Foreign currencies deposit if you put in wrong currency, like USD recent few year or just like I mentioned a New Zealand people put their NZD into RM.

So if one interested in foreign currency deposit, one needs to look at its currency strength and its economy status as currency movement is depended on the particular country economy strength.

So if one believes Malaysia economy is good with RM will appreciate against all major currencies then it is better to put as RM FD. As if it is the case, Foreign Currency deposit won't be good choice as you will lose out in the currency exchange.

But for the last few years, even though RM/USD from 3.60 to 3.15, RM is depreciating against most currencies.

So it is a place for one to diversify and protect against Rm depreciation but not a place to speculate to gain.

This post has been edited by cherroy: Apr 16 2008, 05:43 PM

I think I got it.. thanks anyone calculated worst case for RM/NZD with 8.25% FD rate ?

This post has been edited by wodenus: Apr 16 2008, 06:03 PM

saw your previous post, haha.



anyway, cherroy, the banks you mention here, the interest rate is 7-9% for New Zealand ?

Most banks are 7-9 for NZD I think. But what about slippage ?


This post has been edited by wodenus: Apr 16 2008, 06:04 PM

NZ interest rate is 8.25%. So mostly banks can offer 8.25% or lower, otherwise, if higher they are making a loss from it, so they might need a way to compensate it, like through exchange rate (buy & sell slippage of 2-3%).

Don't understand slippage much. What does slippage mean ?


This post has been edited by wodenus: Apr 16 2008, 06:19 PM