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.

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

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)

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.

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.

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.

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.

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

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

Merge the topic with previous discussed, check it out.

For counter rate around 2-3%.

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

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.

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

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

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

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

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

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.

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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

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

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%).