I'm sure many people will be attracted by this high interest rates, and I am sure many folks out there do not understand about exchange rates, and bank's exchange rates. To them, they probably think that it is a normal fixed deposit, just that it's in foreign currency, yet higher interest rates. Whether the bank tellers will disclose the FX risks clearly to every depositor, I am not sure.
| Rates as at 05 August 2008 03:26:18 PM | |||||
| Code | Foreign Currency | Unit | Selling TT/OD | Buying | |
| TT | OD | ||||
| AUD | AUSTRALIAN DOLLAR | 1 | 1.2792 | 1.2572 | 1.2522 |
| BND | BRUNEIAN DOLLAR | 1 | 1.0000 | 1.0000 | - |
| CAD | CANADIAN DOLLAR | 1 | 1.3313 | 1.3073 | 1.3013 |
| EUR | EURO | 1 | 2.1477 | 2.1247 | 2.1197 |
| GBP | BRITISH POUND | 1 | 2.7087 | 2.6737 | 2.6632 |
| KWD | KUWAIT DINAR | 1 | - | - | - |
| NZD | NEW ZEALAND DOLLAR | 1 | 1.0084 | 0.9864 | 0.9814 |
| USD | US DOLLAR | 1 | 1.3830 | 1.3690 | 1.3630 |
| ZAR | SOUTH AFRICAN RAND | 1 | 0.1922 | - | - |
| BDT | BANGLADESH TAKA | 100 | 2.0643 | - | - |
| CHF | SWISS FRANC | 100 | 132.3498 | 129.8498 | 129.4498 |
| DKK | DANISH KRONER | 100 | 29.0767 | 28.2967 | 27.9967 |
| EGP | EGYPTIAN POUND | 100 | 26.8338 | - | - |
| HKD | HONG KONG DOLLAR | 100 | 17.8155 | 17.4655 | 17.3355 |
| INR | INDIAN RUPEE | 100 | 3.4023 | 3.0523 | 2.8523 |
| JPY | JAPANESE YEN | 100 | 1.2897 | 1.2657 | 1.2622 |
| LKR | SRI LANKA RUPEE | 100 | 1.2944 | - | - |
| MXN | MEXICAN PESO | 100 | 14.0130 | - | - |
| NOK | NORWEGIAN KRONER | 100 | 27.0774 | 26.3774 | 26.0774 |
| PHP | PHILIPPINES PESO | 100 | 3.1538 | - | - |
| PKR | PAKISTAN RUPEE | 100 | 1.9554 | - | - |
| SAR | SAUDI RIYAL | 100 | 36.9741 | - | - |
| SEK | SWEDISH KRONA | 100 | 22.9229 | 22.3229 | 22.0229 |
| THB | THAI BAHT | 100 | 4.2110 | 3.9910 | 3.9110 |
| TWD | NEW TAIWAN DOLLAR | 100 | 4.5400 | - | - |
| KRW | KOREAN WON | 1000 | 1.3780 | - | - |
| VND | VIETNAMESE DONG | 1000 | 0.0828 | - | - |
Above is a table which I copy and paste from UOB website as at now.
Look at NZD bank buys at 0.9864 and bank sells at 1.0084. At yahoo finance, the current spot rate is now 0.9981. Effectively you are buying at 103 pips above the market which goes to the bank's profit.
The FX risk here is that the exchange rate is subjected to fluatuations. Currently, NZD chart is looking very bad, still on a big downtrend, it is now even cheaper than SGD now, really very bad. By simple technical analysis, it will still go down further. If you know of anyone who wants to put NZD Fixed deposit with a bank, try to stop them. Not only NZD is going down, SGD is also going up as part of MAS' inflation curbing policy
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