Hi all,
seeking some advice from the experts here. With the AUD at about parity with the SGD, is this a good time to put some spare cash in AUD fixed deposits?
The only recently times the AUD was lower than SGD were back in the periods 2000 to 2003 and 2008.
Saw OCBC offering 3 month AUD FD at 2.5%.
Nope, for two reasons.
Firstly, AUD can still go lower than parity. AUD interest rates are headed lower, while USD and SGD interest rates are headed higher - and that's going to mean a lower AUD, and a higher USD and SGD in comparison.
Secondly, because you're going to pay MONSTROUS fees to get in and out of your fixed deposit. You're going to get about 0.625% interest (3 months at 2.5% per annum), but you're going to pay about 0.5% to convert to AUD on the way in, and 0.5% to convert back to SGD on the way out - so even if the exchange rate stays exactly where it is, you'll lose money.
If you want to punt on FX rates, sign up with your friendly local CFD broker; they'll be happy to take your money, and they won't charge you 1% to do it. If you want higher interest on your deposits, buy some bonds or some stocks. Foreign-currency FDs are just a horribly expensive way to speculate on FX.
They're a bad product in every regard, unless you already have the foreign currency. Then, maybe they're fine. But if you don't already have some AUD, and you don't need AUD, then there is absolutely no way you should be getting involved in FCFDs.
I have a query.
1. Should i convert SGD to AUD first before opening fixed AUD deposit? How or is done?
2. When the AUD deposit matures, can i draw out AUD dollars or should i convert back to SGD?
Well... you shouldn't do either. See above. But...
3. As I'm planning to buy property in the future, when this AUD deposit matures, can i just move this AUD to any Australian bank via online banking without incurring charges (on Singapore side)?
Thank you.
No - you'll need to pay a wire-transfer fee to send the AUD to an Aussie bank.
