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Why You Need To Invest In A Foreign Currency Fixed Deposit

You may be aware of the fact that different countries in the world operate with different currencies, and exchanging one currency into another involves exchange rates, which can cause financial losses or gains.

However, did you know that you can make investments in local bank accounts in the form of other currencies, and that these investments can be extremely profitable in the long run?

These are called foreign currency fixed deposits (FCFD) – and here’s why you need to invest in them.

What is an FCFD?

FCFDs function like all other fixed deposits, in that they involve investing a fixed sum of money in a bank account for a specific amount of time. At the end of that period and when maturity is reached, your investment will be returned to you – along with all interest earned during the investment period.

You are also strongly discouraged from withdrawing the invested sum during the term period of the investment. Should you choose to withdraw nonetheless, you may receive only part of your initial investment back – although this penalty may differ from one bank to another.

The big difference? FCFDs revolve around making the investment locally in a foreign currency, as opposed to in the local currency of the country in which your bank is located. For example, instead of investing your chosen sum of money in Malaysian Ringgit, you would be making a fixed deposit in US Dollars, Singapore Dollars, Chinese Yuan, or Australian Dollars.

These financial products are currently offered by many major banks in Malaysia. Popular examples include Citibank’s Foreign Currency Time Deposit, Maybank’s Foreign Currency Account Deposit, Alliance Bank’s Foreign Currency Fixed Deposit, and CIMB’s Foreign Currency Fixed Deposit.

What are the features of an FCFD?

Before you rush over to your local bank to make an FCFD investment, however, there are a few key points that you should be familiar with.

  • As aforementioned, FCFDs are subject to interest rates that vary depending on the currency you choose to make your deposit in. For instance, as of the 12th of December 2017, an FCFD with a tenure period of 12 months in CIMB enjoys an interest rate of 1.82% in US Dollars, or 2.29% in Australian Dollars.
  • Different banks will allow you to choose different tenure periods for your FCFD account. Citibank allows tenures that are as short as one week or as long as one year. This is echoed by CIMB and Alliance Bank.
  • In Malaysia, FCFDs are protected by Perbadanan Insurans Deposit Malaysia (PIDM). This body offers you protection of up to RM250,000 for your deposits.
  • Most banks commonly require RM10,000 or USD3,000 as the minimum investment needed to open an FCFD. It is thus good practice to ensure that you are able to freely invest this amount of money without affecting your daily financial requirements, if you are considering an FCFD.

How does FCFD benefit me?

Here are some particularly impressive benefits of FCFDs:

  • FCFDs allow you to protect yourself and your finances against exchange rate fluctuations.
    By storing your money in an FCFD, you will be able to keep this sum safe until the exchange rate tilts in your favour – while earning interest on this investment. This is particularly advantageous for businesses that perform a large volume of importing and exporting internationally on a regular basis.
  • FCFDs are useful if you are planning to migrate overseas in the future.
    For illustration, if you are planning to move to Australia or China in a number of years, you could opt for an FCFD in Australian Dollars or Chinese Yuan with a tenure period that matches your plans. When the time comes for you to embark on your journey to your new home, you would have a substantial sum saved up for usage.
  • FCFDs are a good way to save up some money for your children and their studies abroad.
    If you would like to send your child to Singapore to study in a few years, opening an FCFD account in Singapore Dollars would allow you to build your stores of that currency greatly. Some banks, like CIMB, also allow you to create your FCFD account as a joint one – which would be easy for your children to access in future.
  • FCFDs benefit from higher interest rates than standard fixed deposits. This is especially the case when they are invested in for a long term period. Opting for an FCFD with a long tenure period would also allow your receivable interest to grow – as banks commonly offer higher interest rates for FCFDS with longer tenure periods.


Want to learn more? Just head on over to your local bank of choice and ask for more information on FCFDs. After all, you deserve the best when it comes to your finances – so why not equip yourself with more knowledge in this area to help you make this financial investment beneficial for you?

If you would like to start with a normal fixed deposit account, click this link to find out about the ins-and-outs of fixed deposit for beginners.






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