Deposit Funds In Thai Bank For Interest

[manarak]

I'm considering making a deposit at Kasikorn to collect interest.

4.5% is not bad considering the zero rates in the western world.

I already have an account there, and I'd probably just wire the funds in.

I have some questions.

1- is it easy to wire this money back to my western account if I need it?

or are there some restrictions?

2- will I pay tax on the interest, if I:

- visit the LOS intermittently with a tourist visa

- reside in the LOS on a ED visa or B

3- are there better financial products available than the fixed deposit?

4- are there any other things I should know/consider before doing that?

[barryw52]

www.ubank.com.au 6.51% on call.

[Lite Beer]

You will not get 4.5% at Kasikorn.

What you will get is a Step Up Interest Rate.

You will pay 15% Tax.

You have to visit the branch and open the account.

. Step-up Fixed Deposit 14 Months

Deposits from Baht 0.01 million and above Fixed Deposit Term

1-3 Months 1.25 %

4-6 Months 1.75 %

7-9 Months 2.50 %

10-12 Months 3.50 %

13-14 Months 4.50 %

Kasikorn Bank

[saakura]

4.5% per annum at Kasikorn Bank??? Not a chance. More like 2.5% max

[GreenSnapper]

4.5% per annum at Kasikorn Bank??? Not a chance. More like 2.5% max

It is a 14 months step up account and the effective interest is almost 2.6% per year.

[manarak]

oh, the advertized fixed deposit rates are not per annum?

LOL.

So is the AUD the only way to earn good interest?

Or are there other investments?

What about question 1, are there restrictions on taking money back to Europe?

Edited March 6, 2011 by manarak

[kuffki]

Put the money in AU, you will get the interest rate advertised, easy to access the money, stable and clear. Interest rates are not bad either.

AU is also planning to put up the rates sometime this year so you will benefit again and currency seems to be pretty stable.

I do not have personal experience with Thai banks, but do have a mate who deposited some money on term and at the end was not paid any interest because their reason was, they do not pay interest to foreigners. I know it sounds crazy but its a true story of what took place and there was nothing he could do.

You also have Turkey which is around 15% i think and Russia about the same 15% but both are pretty risky but do pay good returns

Edited March 7, 2011 by kuffki

[manarak]

www.ubank.com.au 6.51% on call.

I checked with ubank, that type of account is only for Australian nationals living in Australia.

[clinique]

link here manarak, many international banks in Singapore will open foreign currency deposit accounts including AUD.

see link as example.

[manarak]

link here manarak, many international banks in Singapore will open foreign currency deposit accounts including AUD.

see link as example.

ICICI bank is an Indian Bank, formerly the "Bank of Rajahstan"...

I'd be glad for links pointing to fixed deposit rates at Banks whose bonds are still rated "investment grade".

4.6% is about the maximum offered by DBS or HSBC.

I get 4.5% at interactive brokers too.

Edited March 16, 2011 by manarak

[kuffki]

link here manarak, many international banks in Singapore will open foreign currency deposit accounts including AUD.

see link as example.

ICICI bank is an Indian Bank, formerly the "Bank of Rajahstan"...

I'd be glad for links pointing to fixed deposit rates at Banks whose bonds are still rated "investment grade".

4.6% is about the maximum offered by DBS or HSBC.

I get 4.5% at interactive brokers too.

I have no personal experience with this bank but see for yourself http://www.axisbank.com/

Also see Bank of India, at the moment they offering 9.75% http://www.bankofindia.com/#null

Edited March 16, 2011 by kuffki

[craigt3365]

I deleted a whole bunch of off topic posts and associated replies. Please keep on topic so we can help the OP with some answers.

One reason for reopening is that a member contacted me with some information regarding a promotion at K-Bank (the green one). I will visit there tomorrow, but he said the minimum deposit is 1 million Baht and basically pays 3.8% net after a 16 month term, which works out a bit less on a yearly basis. It also has a stepped up interest rate.

Again, please stay on topic. :jap:

[GreenSnapper]

One reason for reopening is that a member contacted me with some information regarding a promotion at K-Bank (the green one). I will visit there tomorrow, but he said the minimum deposit is 1 million Baht and basically pays 3.8% net after a 16 month term, which works out a bit less on a yearly basis. It also has a stepped up interest rate.

Kasikorn's new step up account:

10. Step-up Fixed Deposit 16 Months

Deposits from Baht 0.01 million and above Fixed Deposit Term

1-4 1.75 1.75

5-8 2.25 2.25

9-12 3.75 3.75

13-16 6.00 6.00

http://www.kasikornbank.com/EN/RatesAndFees/Deposit/Pages/Deposit.aspx

Results in roughly 3.4% per year.

[manarak]

Ok, I just received an offer from my own bank

(a world top ten private banking institute)

They have AUD bonds with maturities between 2013 and 2014 with yields to maturity between 5 and 6.17%

And they also have AUD certificates of deposit yielding 5.14% for 12 months.

I could cover the currency risk with a forward.

You could do the same with a AUD/THB forward.

There are probably even better rates out there.

[Naam]

I could cover the currency risk with a forward

a straight forward will cost you a bundle Manarak and will eat up nearly all the benefit. especially a forward vs. your home currency CHF (if i am not mistaken you are a Swiss national).

[manarak]

Why would it cost me a bundle Naam?

Do you mean the future price of CHF in AUD is lower than today's price by approx 3%?

I haven't checked the pricing, so I don't know.

But I know several people working at the FX sales desk at my bank, so I will ask them for a quote.

Another thing I could try, especially considering the last currency moves, is to buy a put option on AUD.

But I expect that to be even more expensive than the forward.

How would you immunize the currency risk, Naam?

Edited March 18, 2011 by manarak

[Naam]

Why would it cost me a bundle Naam?

Do you mean the future price of CHF in AUD is lower than today's price by approx 3%?

I haven't checked the pricing, so I don't know.

But I know several people working at the FX sales desk at my bank, so I will ask them for a quote.

Another thing I could try, especially considering the last currency moves, is to buy a put option on AUD.

But I expect that to be even more expensive than the forward.

How would you immunize the currency risk, Naam?

hedging the currency risk with a forward costs the interest rate difference between the two currencies (the one you invest and the one you want to hedge) PLUS fees and PLUS the difference in bid/ask spread of these currencies. the case of AUD/CHF would be a zero sum game with no profit left. the bid/ask spread might be negligible if you use an institution specialising in currency trading.

a forward would look like this:

-invest in AUD at (assumed) 5.50%, maturity (assumed) 2 years.

-sell forward AUD vs. CHF to match exact maturity

-AUD interest = 5.50%

-CHF interest = 1.50% (both interest rates assumed and used for explanation only!)

difference 4.00% = that's exactly the cost of your forward to which fees and bid/ask spread have to be added.

cost for an equivalent option are not higher but slightly less. however, neither a forward nor an option (both covering maturity) will yield a positive result.

if i were in your shoes i'd either gamble without hedging or stay put.

disclaimer: last monday i got out of AUD completely as i consider the downside risk not covered by the overnight rate of 4.32% on cash.

for the record: AUD lost >10% vs. CHF during the last 6 weeks!

[craigt3365]

Ugh...that analysis makes my head hurt!!!!! Reminds me of my days in biz school studying corporate finance.

But great job explaining this...thanks!!! It sure points out if you don't know what you are doing it could be trouble. Not for the faint of heart.

[PattayaParent]

I deleted a whole bunch of off topic posts and associated replies. Please keep on topic so we can help the OP with some answers.

<snip>

Again, please stay on topic. :jap:

Unfortunately in doing that you've deleted the proof that the Russia and Turkey rates of 15% (which remain quoted) are misleading.

[ESB7]

Put the money in AU, you will get the interest rate advertised, easy to access the money, stable and clear. Interest rates are not bad either.

AU is also planning to put up the rates sometime this year so you will benefit again and currency seems to be pretty stable.

I do not have personal experience with Thai banks, but do have a mate who deposited some money on term and at the end was not paid any interest because their reason was, they do not pay interest to foreigners. I know it sounds crazy but its a true story of what took place and there was nothing he could do.

You also have Turkey which is around 15% i think and Russia about the same 15% but both are pretty risky but do pay good returns

Aussie $ is starting to drop...be careful, it could go down 50%.....

[Naam]

Ugh...that analysis makes my head hurt!!!!! Reminds me of my days in biz school studying corporate finance.

But great job explaining this...thanks!!! It sure points out if you don't know what you are doing it could be trouble. Not for the faint of heart.

the explanation was especially important because TV-member Manarak is Swiss and i assumed he might be planning converting precious Swiss Francs into AUD and that based on the assumption he can hedge the currency risk.

[manarak]

the explanation was especially important because TV-member Manarak is Swiss and i assumed he might be planning converting precious Swiss Francs into AUD and that based on the assumption he can hedge the currency risk.

Ugh... you are right Naam, I just checked the forward rates:

AUDCHF 1Y FWD -440.0000 -395.0000

(these are PIPs, so they effectively take about 5% !!!)

:-(

I wonder how much a 12 months AUDCHF put @0.85 would be

Aussie $ is starting to drop...be careful, it could go down 50%.....

Why could it drop 50%?

What sort of crisis/imbalance is Australia facing?

Edited March 18, 2011 by manarak

[manarak]

checked FX option quotes...

They take about the same!

So there is a new financial rule in my book: interest yielding investments in foreign currencies cannot be hedged in a way that makes sense economically.

[Naam]

Aussie $ is starting to drop...be careful, it could go down 50%.....

Why could it drop 50%? What sort of crisis/imbalance is Australia facing?

the present low interest environment whith virtually zero interest for some major currencies (JP¥, USD, €UR, CHF, SGD, etc.) encourages investors to take loans at extremely low interest rates, invest the dough in high yield currencies such as AUD and pocket the difference as profit ("carry trades"). that can cause big problems during crisis times (e.g. 2008) investors apply the "flight to safety method", close their trades and in order to pay back their loans they dump the high yield currency in the market which causes the HY currency to drop substantially. this might invoke "margin calls" from the banks (demanding the loans to be paid back) because the required collateral for the loan is not sufficient to cover the banks' risk. margin calls will cause again a drop of the HY currency.

example: in the period july-october 2008 AUD dropped vs. Thai Baht from 32.75 to 21.26 a drop of 35% when percentage is calculated up>down. the other way to calculate is down/up meaning the investor thinking "how much more would i get if tomorrow the exchange rate is back to 32.xx?" then the result is a whopping 54%.

here's the beef!

[Naam]

here's the beef!

the above graph should make any investor sit back, scratch the back of his head and start a thinking process instead of listening to advice "buy AUD, they yield x% interest!". that applies especially to those who are thinking to establish long term deposits to achieve the additional yield percentage points but rendering them immobile and helpless because they can't act (switch to another currency) if the tide goes against them.

holding high yield currencies on overnight or short time (2 weeks) fixed deposits is a different animal! it enables the investor to switch currencies at low cost with a few mouse clicks or a phone call. but (as already mentioned) short term deposits do not yield 6.xx% but "only" 4.xx%.

[JimsKnight]

Put the money in AU, you will get the interest rate advertised, easy to access the money, stable and clear. Interest rates are not bad either.

AU is also planning to put up the rates sometime this year so you will benefit again and currency seems to be pretty stable.

I do not have personal experience with Thai banks, but do have a mate who deposited some money on term and at the end was not paid any interest because their reason was, they do not pay interest to foreigners. I know it sounds crazy but its a true story of what took place and there was nothing he could do.

Which bank was that with?

[kuffki]

Put the money in AU, you will get the interest rate advertised, easy to access the money, stable and clear. Interest rates are not bad either.

AU is also planning to put up the rates sometime this year so you will benefit again and currency seems to be pretty stable.

I do not have personal experience with Thai banks, but do have a mate who deposited some money on term and at the end was not paid any interest because their reason was, they do not pay interest to foreigners. I know it sounds crazy but its a true story of what took place and there was nothing he could do.

Which bank was that with?

you mean which bank in au or which bank refused to pay interest?

[Rimmer]

Meanwhile back on topic the K Bank offer works like this. I had these numbers confirmed by them this morning.

If you take 1m baht for ease of doing the sums

after 4 months they will pay you B4958

after 8 months they will pay you B6375

after 12 months they will pay you B10625

after 16 months they will pay you B17000

It would seem to be a simple calculation of the period by the interest rate less 15% tax and as GreenSnapper says would seem to be around 3.4%

[fiddlehead]

You will not get 4.5% at Kasikorn.

What you will get is a Step Up Interest Rate.

You will pay 15% Tax.

You have to visit the branch and open the account.

. Step-up Fixed Deposit 14 Months

Deposits from Baht 0.01 million and above Fixed Deposit Term

1-3 Months 1.25 %

4-6 Months 1.75 %

7-9 Months 2.50 %

10-12 Months 3.50 %

13-14 Months 4.50 %

Kasikorn Bank

I was in there today and they told me a lot better interests that that (above)

They gave me a brochure that is basically the same as this link: http://www.kasikornbank.com/EN/Pages/Default.aspx

(up to 6% interest)

10,000 baht minimum.

Is there a trick? Something I'm missing here? This seems like an incredible rate at todays interest rates.

[fiddlehead]

Sorry, wrong link. Try this one: http://www.kasikornbank.com/EN/PromotionPrivileges/Pages/Deposit16Months.aspx