Interest Rates Up For Aussies

[bmanly]

Whilst it is bad for people who have loans it is welcome news for expats living off of interest income. What it means is that online savings accounts like ING, Easystreet and Bankwest will now be paying 5.75% for at call deposits. Our $ has jumped quite well against the USD and THB in the last 2 weeks as well. Here's the story.

AAP News

RBA lifts interest rates by .25 per cent

Wednesday May 3, 2006, 9:33 am

The Reserve Bank of Australia lifted the official cash rate by 25 basis points to 5.75 per cent.

This is the first time the central bank has raised interest rates since March 2005.

Most economists expected interest rates to remain unchanged, although four out of 13 economists surveyed by AAP had forecast an upward move.

[Mighty Mouse]

My g/f is now rubbing her grubby little hands together and *oooh aaahing* as she stalks around the house.

She checks the Thai foreign exchange rate each day from Sydney.

I can almost hear the wheels grinding around inside her head as she calculates the extra money now available to her.

Gotta luv 'em.

[LindsayBKK]

Whilst it is bad for people who have loans it is welcome news for expats living off of interest income. What it means is that online savings accounts like ING, Easystreet and Bankwest will now be paying 5.75% for at call deposits. Our $ has jumped quite well against the USD and THB in the last 2 weeks as well. Here's the story.

AAP News

RBA lifts interest rates by .25 per cent

Wednesday May 3, 2006, 9:33 am

The Reserve Bank of Australia lifted the official cash rate by 25 basis points to 5.75 per cent.

This is the first time the central bank has raised interest rates since March 2005.

Most economists expected interest rates to remain unchanged, although four out of 13 economists surveyed by AAP had forecast an upward move.

I have tried applying for easystreet ann Bankwest but they say need to be a resident. How do you get around it? Give a family or friends address? I am with St.george 5.25%. And use my AMEX for transactions cause I have a NO annual fee and 55days interest free. No fees at all.

[Niloc]

ING has been paying 6.4% so will now be going up a bit....

[Pink Mist]

both my mortgage repayments have both gone up, luckily the house in KK is freehold

[bendix]

ING has been paying 6.4% so will now be going up a bit....

Are you sure that's right? The www.ingdirect.com.au website says it's 5.4%, not 6.4%. I currently get 5.5% from citibank australia.

[samran]

ING had an offer of 6.4% for any new deposits until June above and beyond your balance at the beginning of the offer.

[bmanly]

Are you sure that's right? The www.ingdirect.com.au website says it's 5.4%, not 6.4%. I currently get 5.5% from citibank australia.

Be careful, a letter out today outlines changes to the Citibank Online Cash Manager Account. From 1st. June all deposits under 5K will be reduced to 4% interest. From 5K to 100K it will be 4.75%. Anything over 100K will get 5.5%. Time to look for somewhere new me thinks.

[warriors]

Are you sure that's right? The www.ingdirect.com.au website says it's 5.4%, not 6.4%. I currently get 5.5% from citibank australia.

Be careful, a letter out today outlines changes to the Citibank Online Cash Manager Account. From 1st. June all deposits under 5K will be reduced to 4% interest. From 5K to 100K it will be 4.75%. Anything over 100K will get 5.5%. Time to look for somewhere new me thinks.

Put it in New Zealand bank they are paying 7.35 for 5 months deposits I think 3 months now pay 7% per annum

[LaoPo]

Are you sure that's right? The www.ingdirect.com.au website says it's 5.4%, not 6.4%. I currently get 5.5% from citibank australia.

Be careful, a letter out today outlines changes to the Citibank Online Cash Manager Account. From 1st. June all deposits under 5K will be reduced to 4% interest. From 5K to 100K it will be 4.75%. Anything over 100K will get 5.5%. Time to look for somewhere new me thinks.

Put it in New Zealand bank they are paying 7.35 for 5 months deposits I think 3 months now pay 7% per annum

Be very Careful !

"The Reserve Bank will maintain interest rates at 7.25% in the short term, but concerns over the economy have significantly over the past few weeks, especially as there was a surprise contraction for the economy for the fourth quarter of 2005. With markets anticipating a turn in the cycle, the New Zealand dollar will remain vulnerable until there is a clear peak in the US interest rate cycle. The longer-term New Zealand economic concerns will continue and there will be an important focus on the current account deficit which was running at over 10.0% of GDP during the second half of 2005. There is the risk of capital outflows and the currency will be particularly vulnerable if there is a sustained increase in global risk aversion. The central bank and government have warned that the currency is overvalued, increasing the risk that speculative funds will be withdrawn over the next few months, although the currency has now moved close to fair value which will stem domestic calls for a weaker currency. The bond flows into New Zealand are liable to be weaker this year which will maintain underlying currency vulnerability. Further depreciation is likely over the next few months, but with an interim recovery realistic."

source: http://www.investica.co.uk/newzealand.htm

The higher interest rates a (Central) bank gives...the higher the risks of a depreciation. It's a worldwide economics law...

LaoPo

Edited May 4, 2006 by LaoPo

[samran]

Are you sure that's right? The www.ingdirect.com.au website says it's 5.4%, not 6.4%. I currently get 5.5% from citibank australia.

Be careful, a letter out today outlines changes to the Citibank Online Cash Manager Account. From 1st. June all deposits under 5K will be reduced to 4% interest. From 5K to 100K it will be 4.75%. Anything over 100K will get 5.5%. Time to look for somewhere new me thinks.

Put it in New Zealand bank they are paying 7.35 for 5 months deposits I think 3 months now pay 7% per annum

As someone has already said much more elequently in another thread, there is no way on earth that you can make money by chasing the higer interest rates. The financial markets arbitrage away any interest rate differentials in moments by movements in the exchange rate. You just can't print money.

To give you an example, if you sent baht to NZ in January to take advantage on the higher interest rates there, you would have lost out if you were to transfer your money back today. Setting aside any money transfer fees, the depreciation in the NZD vs the THB since january means that any interest gains have been wiped away by the lower NZD.

[LaoPo]

Are you sure that's right? The www.ingdirect.com.au website says it's 5.4%, not 6.4%. I currently get 5.5% from citibank australia.

Be careful, a letter out today outlines changes to the Citibank Online Cash Manager Account. From 1st. June all deposits under 5K will be reduced to 4% interest. From 5K to 100K it will be 4.75%. Anything over 100K will get 5.5%. Time to look for somewhere new me thinks.

Put it in New Zealand bank they are paying 7.35 for 5 months deposits I think 3 months now pay 7% per annum

As someone has already said much more elequently in another thread, there is no way on earth that you can make money by chasing the higer interest rates. The financial markets arbitrage away any interest rate differentials in moments by movements in the exchange rate. You just can't print money.

To give you an example, if you sent baht to NZ in January to take advantage on the higher interest rates there, you would have lost out if you were to transfer your money back today. Setting aside any money transfer fees, the depreciation in the NZD vs the THB since january means that any interest gains have been wiped away by the lower NZD.

So true!

LaoPo

[bmanly]

As someone has already said much more elequently in another thread, there is no way on earth that you can make money by chasing the higer interest rates. The financial markets arbitrage away any interest rate differentials in moments by movements in the exchange rate. You just can't print money.

To give you an example, if you sent baht to NZ in January to take advantage on the higher interest rates there, you would have lost out if you were to transfer your money back today. Setting aside any money transfer fees, the depreciation in the NZD vs the THB since january means that any interest gains have been wiped away by the lower NZD.

That was meerkat who said that, a smart guy. You and meerkat are right of course but that can go both ways. Had you have invested THB into AUD at 26 baht to 1 AUD a Month ago you would be well out in front today. The AUD has run stronly and is almost 29 baht to the $ today, plus the interest rates are up to 5.75% now. You used the NZD as a worst case and I used the AUD as a best case, in the end it is gambling isn't it. Trying to guess which way a currency will go is a risky business.

[samran]

Trying to guess which way a currency will go is a risky business.

I read a study once (or maybe just Ross Gittins in the SMH) who said that the only people who are close to getting currency calls right more often than not are the traders themselves. From their order and sell books they tend to develop a 'feel' for the demand and supply for the currency at any particular point in time, and are best able to exploit any aribitrage opportunities. But these gaps in the market are wiped out in seconds, so there are no scraps for the rest of us.

Those of us who are removed from this process stand very little hope on betting on the currency markets - in essence we are gambling.