How's the Australian dollar?

[CS Chua]

Anyone investing in the Australian dollar? Their interest rate is twice as high as the Malaysian ringgit. With possible appreciation against the ringgit, it seems like a good reason to park some money in the Australian dollar. Right or wrong?

[coogee]

Careful...the Reserve Bank is expected to drop interest rate next month.

[CS Chua]

And that might signal a reverse trend for the Aussie dollar, I guess.

[Sato]

Last I check the rate is something like RM2.9* for AUD$1.00.

[ahbitchew]

in early July the exchange rate was at RM3.15 for AUD$1 and now it is RM2.90. If I were to invest in AUD then I would have sufferred a 8% lost now, so what is the point of high FD interest rate for AUD ?

[Sato]

in early July the exchange rate was at RM3.15 for AUD$1 and now it is RM2.90. If I were to invest in AUD then I would have sufferred a 8% lost now, so what is the point of high FD interest rate for AUD ?

Anything that goes up must come down as usual. Currently, you are talking about FD rate offer by Public Bank is 7.40% per annum. Current exchange rate is RM2.9470 for AUD$1 as per 25/08/08 11:18 AM.

[rachel sj]

Then is it a good time to visit Ausie ? since the exch rate has gone down abt RM0.20 now ?

[Sato]

Then is it a good time to visit Ausie ? since the exch rate has gone down abt RM0.20 now ?

wait longer i heard those bank staff told me about some news, its going to go down further, more discount for you.

[lizzy]

Anything that goes up must come down as usual. Currently, you are talking about FD rate offer by Public Bank is 7.40% per annum. Current exchange rate is RM2.9470 for AUD$1 as per 25/08/08 11:18 AM.

There is a catch to the this.. as I found out recently.

- you need to exchange your RM to A$in the bank, can't use A$..and bank selling rate is typically higher than the normal money changer.

- when you want to close your foreign FD account, you would then need to exchange the A$ back to RM at that bank as well, at the then exchange rate, and again, bank's buying rate is typically lower than normal money changer.

- the other alternative is of course for you to transfer the A$ to an account in Aussie, then you can 'preserve' the A$ as it is.

I hear that the current rate is still too high and may go down further..some speculate down to 2.5. For those who follow closely, what's your view?

[blurrman]

izzy is right.

unless u want to use the aussie dollar, keeping foreign currency in local "foreign acc" is not a very good idea. the bank will charge you two way for keeping foreign dollar in local "foreign acc" . usually one way is roughly 4% (exchange rate profit), so both way will be roughly 8%. assuming that the currency did not change much, whatever interest that u earn will goes to the exchange profit.

read the bank's disclaimer , there will be risks!!

[lizzy]

izzy is right.

unless u want to use the aussie dollar, keeping foreign currency in local "foreign acc" is not a very good idea. the bank will charge you two way for keeping foreign dollar in local "foreign acc" . usually one way is roughly 4% (exchange rate profit), so both way will be roughly 8%. assuming that the currency did not change much, whatever interest that u earn will goes to the exchange profit.

read the bank's disclaimer , there will be risks!!

geez, I didn't know that. What I found out was enough to turn me off. Is this 4% 'exchange rate profit' on top of the 'lost' in the exchange of currency?

[Sato]

There is a catch to the this.. as I found out recently.

- you need to exchange your RM to A$in the bank, can't use A$..and bank selling rate is typically higher than the normal money changer.

- when you want to close your foreign FD account, you would then need to exchange the A$ back to RM at that bank as well, at the then exchange rate, and again, bank's buying rate is typically lower than normal money changer.

- the other alternative is of course for you to transfer the A$ to an account in Aussie, then you can 'preserve' the A$ as it is.

I hear that the current rate is still too high and may go down further..some speculate down to 2.5. For those who follow closely, what's your view?

don't worry for the conversion part you can choose. when your fd is due to redeem just wait for the exchange rate when its favourable then you only switch back to malaysia ringgit.

[coogee]

There is a catch to the this.. as I found out recently.

- you need to exchange your RM to A$in the bank, can't use A$..and bank selling rate is typically higher than the normal money changer.

- when you want to close your foreign FD account, you would then need to exchange the A$ back to RM at that bank as well, at the then exchange rate, and again, bank's buying rate is typically lower than normal money changer.

- the other alternative is of course for you to transfer the A$ to an account in Aussie, then you can 'preserve' the A$ as it is.

I hear that the current rate is still too high and may go down further..some speculate down to 2.5. For those who follow closely, what's your view?

Note that non resident of Australia are liable for withholding tax for interest earned. Read link : http://www.ato.gov.au/businesses/con...tent/66410.htm

Note also the consensus by most forex analyst is for the Reserve Bank to drop rates by 0.25% next month. How much if this is already factor in to the current exchange rate is anybody's guess but I would imagine there are numerous other factors at play for the aussie currency among which includes the balance of trade (export of commodities still pulling in big bucks), gov surplus of funds (record surplus of A$25 billion reported this morning), yen carry trades (funds from low interest japanese yen to aussie investments) etc. If anyone with b*lls dare accurately predict how the aussie will go I ll buy all the TT's he/she wants! By the way, we seems to be focussed on the aussie, think the ringgit may hold more sway with current unpredictable political environment.

[blurrman]

geez, I didn't know that. What I found out was enough to turn me off. Is this 4% 'exchange rate profit' on top of the 'lost' in the exchange of currency?

yes, it is on top of the 'lost'/'gain' in the exchange

4% is just a rough estimation, usually the local bank make around RM0.04 to RM0.08 for exchange rate, depending on the bank, and currency. when you buy, they make RM0.04-0.08, when you sell they also make another RM0.04-RM0.08

sato is right, if u really dun need the money, u can wait till the exchange rate goes up, and then only convert back to RM. the issue is when to enter and when to leave, hence the risk. not as easy as the normal local FD that we have.

therefore the 'gain of exchange' + 'interest earn' must be larger than '2 way exchange profit by the bank' in order to earn money.

[Sato]

yes, it is on top of the 'lost'/'gain' in the exchange

4% is just a rough estimation, usually the local bank make around RM0.04 to RM0.08 for exchange rate, depending on the bank, and currency. when you buy, they make RM0.04-0.08, when you sell they also make another RM0.04-RM0.08

sato is right, if u really dun need the money, u can wait till the exchange rate goes up, and then only convert back to RM. the issue is when to enter and when to leave, hence the risk. not as easy as the normal local FD that we have.

therefore the 'gain of exchange' + 'interest earn' must be larger than '2 way exchange profit by the bank' in order to earn money.

every investment is a form of investment, low risk low return,high risk high return, its a matter of choice and cost only. End of the day, if you are not comfortable, then just put in local FD, i m sure you will find it waste of your time to put in local currency FD unless you millions of them to help you cushion your daily need,otherwise don't think you money is making it work for you if you put in local currency fd.