Best Way To Diversify From U.s. Dollars

[Orangutan]

Hello,

Just wondering how I could acquire and hold currencies from the countries mentioned above? Where do you purchase foreign currencies, and how/where do you keep them? Is there an offshore bank that can provide you with different denominated accounts? I have no knowledge of how to do this but I'm very interested in thinning my U.S. dollar holdings for the long term.

Any information would be appreciated.

-O

Edited March 5, 2007 by Orangutan

[meom]

There's some banks where you can open multi currency accounts. I am not really familiar with this but other posters will probably give you more info later on.

If you're really loaded and not averse of risk you could take a mia noi in each country you prefer, send them a monthly allowance and after deduction of their expenses ask them to hold on to the balance for you . Works for some people but is not for everybody.

[Khun ?]

Beyond positions in individual currencies, traders might consider using one of two new ETFs released by the innovative folks at PowerShares and Deutsche Bank. The PowerShares DB U.S. Dollar Bullish Fund (UUP) and the PowerShares DB U.S. Dollar Bearish Fund (UDN) are based on movements in the U.S. Dollar Index, which charts the dollar relative to six major currencies. The biggest components are the euro (57.6%), the yen (13.6%) and the British pound (11.9%), along with single-digit allocations to the Canadian dollar (9.1%), Swedish krona (4.2%) and Swiss franc (3.6%).

[cclub75]

Well, there are some very simple tools : Foreign Currency Fixed Deposit (or Time deposit).

You stay liquid, you are flying away from USD (wise move) , and you earn interests.

All the banks offer such accounts.

You just have to choose the currency you want and a tenure (1 month to XX months). Interests are paid at maturity. If you take back your cash before maturity, you pay a fee.

Another thing : better to do it "off shore". For instance, in Singapore : where you don't pay taxes on interests earned (therefore the interest rate is net).

http://www.ocbc.com.sg/personal-banking/

http://www.dbs.com/sg/personal/deposit/foreignfixed/

http://www.dbs.com/ratesonline/fdacu.html

[Naam]

You just have to choose the currency you want and a tenure (1 month to XX months). Interests are paid at maturity. If you take back your cash before maturity, you pay a fee.

as we have in most currencies an inverted interest rate curve it pays to put cash at overnight or 48hours rate to get the best rate. the problem is that the average bank in Singapore does not offer these deposits and a number of banks allow only amounts exceeding the value of USD >100k.

on overnight i get presently:

USD 5.17%

€UR 3.49%

GBP 5.26%

CHF 1.96%

[Orangutan]

You just have to choose the currency you want and a tenure (1 month to XX months). Interests are paid at maturity. If you take back your cash before maturity, you pay a fee.

as we have in most currencies an inverted interest rate curve it pays to put cash at overnight or 48hours rate to get the best rate. the problem is that the average bank in Singapore does not offer these deposits and a number of banks allow only amounts exceeding the value of USD >100k.

on overnight i get presently:

USD 5.17%

€UR 3.49%

GBP 5.26%

CHF 1.96%

Dr. Naam,

What countries currently have lower deposit minimums, and support the overnight rates you are getting?

-O

[khunandy]

Hello,

Just wondering how I could acquire and hold currencies from the countries mentioned above? Where do you purchase foreign currencies, and how/where do you keep them? Is there an offshore bank that can provide you with different denominated accounts? I have no knowledge of how to do this but I'm very interested in thinning my U.S. dollar holdings for the long term.

Any information would be appreciated.

-O

O-

I recently opened a HSBC PowerVantage account in Hong Kong (I work in China) and this account allows 10 different holding accounts in 10 different currencies.

I get paid in $US and it is held in $US until I distribute it into different currencies within my main account.

Then if I am in Thailand I withdraw at the ATM Thai Baht from my internal Thai baht account, same for Australia, Singapore and wherever.

It also has a good TT service with funds deposited into overseas nominated accounts within 2 hours.

The best account I have had and has many options for term deposits etc It was also very easy to open.

I am not sure if the Thai branches of HSBC offer the same or similar, have a look at their website.

Khun Andy

[Orangutan]

Khun Andy,

I already have a U.S. online savings account at HSBC paying 5.05% apy. I will take your advice and check out the PowerVantage account. So do you have a seperate ATM card for every account, or just one ATM card linked to all of your accounts?

Many thanks,

-O

[Orangutan]

Well, there are some very simple tools : Foreign Currency Fixed Deposit (or Time deposit).

You stay liquid, you are flying away from USD (wise move) , and you earn interests.

All the banks offer such accounts.

You just have to choose the currency you want and a tenure (1 month to XX months). Interests are paid at maturity. If you take back your cash before maturity, you pay a fee.

Another thing : better to do it "off shore". For instance, in Singapore : where you don't pay taxes on interests earned (therefore the interest rate is net).

http://www.ocbc.com.sg/personal-banking/

http://www.dbs.com/sg/personal/deposit/foreignfixed/

http://www.dbs.com/ratesonline/fdacu.html

cclub75,

Thanks for the DBS links...very helpful and straight forward. Now digging deeper regarding fees etc.

-O

[Orangutan]

Khun Andy,

I already have a U.S. online savings account at HSBC paying 5.05% apy. I will take your advice and check out the PowerVantage account. So do you have a seperate ATM card for every account, or just one ATM card linked to all of your accounts?

Many thanks,

-O

P.S. I'm looking at the HSBC PowerVantage account but have found no reference to foreign holding accounts and/or rates. Would it be possible to provide a link?

-O

[Meerkat]

P.S. I'm looking at the HSBC PowerVantage account but have found no reference to foreign holding accounts and/or rates. Would it be possible to provide a link?

-O

http://www.hsbc.com.hk/1/2/hk/banking/accounts#fcy_acc

Think this is the one he was on about. I used to have one myself - very useful.

Not sure how easy it is to get one without a HK address though.

[topfield]

Can anyone provide info on deposit/fixed term accounts in UAE dirhem please ?

Have emailed both HSBC and Stanchart both of which have branches in Dubai and both replied NO DEAL !

As the dirhem is currently tied to the US dollar at 3.67 and has potential for a large rise in value once the link is broken , as happened with the ringit last year, this seems to me to be the best one way bet one could make esp so as AED interest rates are I believe similar to USD rates.

Yes. to pre-empt a reply that the answer is indeed that I should board the first plane to Abu Dhabi or Dubai and find out for myself, nevertheless if anyone at Thaivisa has any info, this would be greately appreciated.

Also others might like to look at the dirhem as a replacement/ substitute for US dollars.

Thanks .

[Naam]

Also others might like to look at the dirhem as a replacement/ substitute for US dollars.

Thanks .

topfield,

UAE Dirham pays the same interest rate in the Emirates which you get there for USD. the problem is that the banks in the Emirates are awash with cash and bankers are reluctant to quote rates as good as offshore (USD only). holding Dirhams offshore is not possible as there is no demand at all.

based on the fact that AED is a petrocurrency which is pegged to the dollar as long as i can remember i don't see a move up against USD for quite some years to come.

[Naam]

"What countries currently have lower deposit minimums, and support the overnight rates you are getting?"

------

orang,

it doesn't depend on the country but on the banks you are dealing with. to the best of my knowledge you can't get anywhere "good" overnight rates for a value of less than 100.000 dollars as rates are up to a certain extent also tied to the amount deposited.

i found a good example a couple of weeks ago when i detected in the account of a friend (which i am handling) an overnight rate for dollars of 4.75%. when i complained i was told that only amounts of min 100k qualify for a better rate.

the irony is that the cash-dollars in my friends account amounted to 93.000 !

by the way, o/n rates have slightly gone up since my last posting. presently i am getting 5.22% and if my dollar cash would reach or exceed 500k the rate is 5.31%.

[topfield]

Is 5.35/5.40 pa for three month dollars any use to you ?

If so the largest non state bank in India offers these rates in Singapore.

Service almost non existant but rates amongst the best for a highly rated bank.

Cheers

[samran]

why don't people stick their money in an ING direct account in the UK? Pretty high rates all considered!

[cclub75]

why don't people stick their money in an ING direct account in the UK? Pretty high rates all considered!

Because people don't like to pay... taxes.

I do not.

Uk, France, US.... all the same sxxx.

Cash is warm off shore. And i'm not speaking about some sleazy "caraibean paradises".

Singapore is perfect (at least for no tax on interests).

[khunandy]

P.S. I'm looking at the HSBC PowerVantage account but have found no reference to foreign holding accounts and/or rates. Would it be possible to provide a link?

-O

http://www.hsbc.com.hk/1/2/hk/banking/accounts#fcy_acc

Think this is the one he was on about. I used to have one myself - very useful.

Not sure how easy it is to get one without a HK address though.

No Hong Kong address needed, all paperwork gets sent to Aussie, no reason why not get it sent to Thailand. On the website there is a list of criteria you need to open up an account. I dont think it was much and they didnt ask for that when I opened my account, I think they wanted my passport and a utilities bill tying you to the given address. All open and internet ready in 30 minutes, including atm card.

One card for all currencies and one of those pin number generators for internet banking.

Khun Andy

[Naam]

Is 5.35/5.40 pa for three month dollars any use to you ?

If so the largest non state bank in India offers these rates in Singapore.

Service almost non existant but rates amongst the best for a highly rated bank.

Cheers

the present interbank rate for deposits of USD 1mm and more is

bid 5.210% /ask 5.330%

any bank that quotes more than 5.33% is fishy or trying to bullsh** clients.

[Naam]

just checked interest of HSBC HK for a number of currencies. in one word RIDICULOUSLY low.

http://www.hsbc.com.hk/1/2/!ut/p/_s.7_..._A7K/.p/5_1_78C

[Orangutan]

just checked interest of HSBC HK for a number of currencies. in one word RIDICULOUSLY low.

http://www.hsbc.com.hk/1/2/!ut/p/_s.7_..._A7K/.p/5_1_78C

Yes I did as well and found that the rates of all the currencies are below what you could get in the country of origin. For example I'm getting 5.60% APY in a U.S. CD, the HK rate was 2.?%.

On the other side of setting up one of these foreign money accounts is that your also betting the currency appreciates against the dollar.

-O

[pampal]

Can anyone provide info on deposit/fixed term accounts in UAE dirhem please ?

Have emailed both HSBC and Stanchart both of which have branches in Dubai and both replied NO DEAL !

As the dirhem is currently tied to the US dollar at 3.67 and has potential for a large rise in value once the link is broken , as happened with the ringit last year, this seems to me to be the best one way bet one could make esp so as AED interest rates are I believe similar to USD rates.

Yes. to pre-empt a reply that the answer is indeed that I should board the first plane to Abu Dhabi or Dubai and find out for myself, nevertheless if anyone at Thaivisa has any info, this would be greately appreciated.

Also others might like to look at the dirhem as a replacement/ substitute for US dollars.

Thanks .

I would avoid the Dirham

UAE's largest trade partner is Iran and they are about to be embargoed. If that happens, a large chunk or UAE trade will cease to exist and that will weaken their currency.

[Khun Bob]

If the dirham is pegged to the dollar how will embargos on iran affect it (unless the pegging point is changed...)

So US contributes to an embargo on iran that weakens USD, there fore American exports are alot cheaper and they devalue the Chinese holding, causing the Chinese to sell large amounts of USD resulting in USD even cheaper! So much so that the chinese out-source their manufacturing to USA for the cheaper labor (ok - maybe not!) Simple ! But you dont make any money out of trading dirhams unless it is unpegged or pegging changed favorably

Can anyone provide info on deposit/fixed term accounts in UAE dirhem please ?

Have emailed both HSBC and Stanchart both of which have branches in Dubai and both replied NO DEAL !

As the dirhem is currently tied to the US dollar at 3.67 and has potential for a large rise in value once the link is broken , as happened with the ringit last year, this seems to me to be the best one way bet one could make esp so as AED interest rates are I believe similar to USD rates.

Yes. to pre-empt a reply that the answer is indeed that I should board the first plane to Abu Dhabi or Dubai and find out for myself, nevertheless if anyone at Thaivisa has any info, this would be greately appreciated.

Also others might like to look at the dirhem as a replacement/ substitute for US dollars.

Thanks .

I would avoid the Dirham

UAE's largest trade partner is Iran and they are about to be embargoed. If that happens, a large chunk or UAE trade will cease to exist and that will weaken their currency.

[Khun Bob]

So which singapore banks are receptive and welcoming for remote applications - and are low cost ?

So far mentioned is :

hsbc

ocbc

Standard Chartered (i think)

Anyone had any luck or disaster/warning stories with other banks in singapore (as a remote user wanting foreign currency accounts)

[samran]

why don't people stick their money in an ING direct account in the UK? Pretty high rates all considered!

Because people don't like to pay... taxes.

I do not.

Uk, France, US.... all the same sxxx.

Cash is warm off shore. And i'm not speaking about some sleazy "caraibean paradises".

Singapore is perfect (at least for no tax on interests).

But for small to medium sized nest eggs, it can't be too bad a place to park your money considering that the international majors may give you an account, but won't give you much in terms of interest unless you are mucho richo.

[Naam]

just checked interest of HSBC HK for a number of currencies. in one word RIDICULOUSLY low.

http://www.hsbc.com.hk/1/2/!ut/p/_s.7_..._A7K/.p/5_1_78C

For example I'm getting 5.60% APY in a U.S. CD, the HK rate was 2.?%.

-O

it doesn't really make a big difference in this case but APY (compounded interest taken into consideration) is hardly ever used by international banks although it would be a good marketing factor. for an accurate comparison the straight yield p.a. should be used.

using APY (especially on long term deposits) distort comparisons.

[Naam]

Anyone had any luck or disaster/warning stories with other banks in singapore...

if your net capital is <$1million don't try any swiss or german bank in Singapore unless you enjoy to hear some arrogant and stupid banker making fun of you.

[exchange1973]

what about currency futures?

usually these futures were bought to hedge against currency risks.

if you ask for diversifying from us$ you assume that hold to much $ is risky, right?

futures are good instruments for hedging. and the advantage is, that you don't need several currency accounts.

best regards

exchange1973

[Naam]

what about currency futures?

usually these futures were bought to hedge against currency risks.

if you ask for diversifying from us$ you assume that hold to much $ is risky, right?

futures are good instruments for hedging. and the advantage is, that you don't need several currency accounts.

best regards

exchange1973

unfortunately for THB no futures are offered offshore, just straight forwards. don't know about Thailand though. but even forwards are two-edged swords because of the huge difference between onshore and offshore rates.

[Naam]

"futures"

------

personally i don't like futures but hedge my dollar exposure with simple currency forward deals which i can close any time (24hrs a day, 6 days a week) when the tide is against me. buying or selling futures are limiting my capability to act. the problem is always to decide in which way (vs. what currency) one hedges the dollar exposure. during the last few years the best way was vs. GBP and €UR. but that did not really help investors who's income is used up more or less to cover expenses in THB. GBP and €UR also lost a bundle vs. THB.