The ringgit is likely to depreciate against the US dollar this week. As of Friday, the ringgit was trading at MYR3.50/US$1 if compared to last 2 week was MYR3.46/US$1. This same happened to MYR/SG$.
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Calculate Fixed Deposit Rate Should Be Based On Currency Rate
As a comparison, if you deposit RM1, 000 into Malaysia Fixed Deposit Account, you might be able to get return of 2.5% per annum (current FD rate) while Singapore banks offers around 1.5% per annum for Singapore dollars, it might sound like a very good deal to convert all your Singapore dollars to Malaysia Ringgit, then deposit into Malaysia Fixed Deposit Account, right?
You should do some careful calculation and consider about the factor in currency depreciation. As everybody known, Singapore dollar has traditionally appreciated against the Malaysian Ringgit. From Jan 2008 to May 2009, SG$1 has risen from RM2.30 to RM2.40, a 4.34% increased.
Lets Take My Example:
If you have RM1,000 (SG$434 based on exchange rate of 2.30) in Jan 2008, you will now get:
Malaysia Bank Fixed Deposit
1,000 x 1.025 (Fixed Deposit Rate of 2.5% ) = RM1,025
Singapore Bank Fixed Deposit
434 x 1.015 (Fixed Deposit Rate of 1.5%) x 2.40 (Currency Conversion rate now) = RM1,057
As a conclusion, which one is better? Can you understand my simple calculation? So, now do you know why our bank Fixed Deposit are more higher?
If you converted all the currency into RM of course Singapore has higher interest. But the living standard in Singapore is different with Malaysia. So from a Singaporean point of view, I think Singapore bank offered lower interest compare to Malaysia. :p
Anyway, well developed countries such as Singapore, Japan and etc have lower interest rate because the government encourage people to spend their money to help the economy rather than keeping the money in the bank. 🙂 (If I’m not mistaken… hehe)
To me, fixed deposit is a waste of resources! 🙂
I got a very minimal fixed deposit in Public Bank.
That one also was forced to because i wanted a credit card.
Oh well, Fixed Deposit just now my cup of tea.
Yes, I think especially if you want to invest foreign FD that we must consider the currency.
You will lost money when the currency go down. Just like investment.
Well, for some information. Singaporean who place Fixed Deposit at Msia, consider a EXTERNAL customer, interest rate is about 1% lower than their resident. That is what I found out only last week..
Yes, they try to cheat you since there is no reason for giving lower rates just because you are a foreigner. It is their currency after all. Since it is not encouraged, don’t put there.
They are afraid of short term funds entry and exit. So this is not a valid reason, including for sg.
The real reason is trying to emulate USD.