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Foreign currency fixed deposit in Singapore
Invest in a foreign currency of your choice and earn high interest rates over a fixed term.
Foreign currency fixed deposits (FCFD) is a type of low-risk investment facility offered by banks that allows you to capitalise on extra cash you have for a fixed commitment period.
Find out all that you need to know about foreign currency fixed deposit accounts in our guide.
What's in this guide?
- What is a foreign currency fixed deposit?
- What are the currencies available?
- How does foreign currency fixed deposit interest rates work?
- What factors affect foreign currency fixed deposit interest rates?
- How are interest rate for foreign currency fixed deposit calculated?
- Are there any risks involved with foreign currency fixed deposits?
- How to find the best foreign currency fixed deposit account
- Ask these questions when you're comparing between foreign currency fixed deposit offers
- What are the benefits of foreign currency fixed deposit accounts?
- What should I look out for?
- How do I open a foreign currency fixed deposit account?
- Compare a range of savings accounts in Singapore
What is a foreign currency fixed deposit?
Foreign currency fixed deposits (also called foreign currency time deposits) works in the same way as conventional fixed deposits, except that investors are allowed to convert their Singapore dollar to foreign currency units. The funds are then deposited for a set period (e.g. six months or a year) and earn interest at a predetermined rate. Upon maturation, the funds will be converted back to SGD at the prevailing exchange rate.
What are the currencies available?
Banks in Singapore typically offer a variety of major currencies for foreign currency FDs, including:
- United States dollar (USD)
- Australian dollar (AUD)
- Canadian dollar (CAD)
- Euro (EUR)
- Sterling pounds (GBP)
- Hong Kong dollar (HKD)
- Japanese yen (JPY)
- New Zealand dollar (NZD)
Do note that different banks offer different interest rates, even for the same countries. For instance, one bank might offer 0.45% p.a. interest for an USD 20,000 deposit across six-month tenure, while another might offer only 0.35% p.a.
Also, banks usually offer promotional rates from time to time, so make sure to keep this in mind and compare your options before applying.
How does foreign currency fixed deposit interest rates work?
Fixed deposits are often deemed as a safe and almost risk-free investment due to its guaranteed return at a higher and fixed interest interest rate compared to regular savings account.
When you apply for a new fixed deposit account, you’ll be offered an interest rate (contingent on the amount of funds deposited and term) which will be the same throughout the entire deposit term. This means that if you’re offered a 1% p.a. interest when you opened your fixed deposit account, and the rate falls to 0.8% p.a. a few months later, the amount in your account will still continue to accrue interest at 1% p.a.
What factors affect foreign currency fixed deposit interest rates?
- Interest rates tend to vary according to the tenure and size of the deposit. In general, longer tenures or a larger deposit size yield better interest rates. However, this may differ from bank to bank.
- New fixed deposit accounts tend to fluctuate month-to-month. Bank’s rates are ever-changing and they are usually not published on their websites. So make sure to always check directly with the banks for the latest offers before deciding.
How are interest rate for foreign currency fixed deposit calculated?
The calculation for interest earned through fixed deposit is straightforward. To find out how much return you’d get, simply multiply the principal (amount you deposit) by the offered interest rate (% p.a.) by tenure for the deposit (fraction of a year – e.g. 0.5 for 6 months, 1.5 for 18 months).
|Interest rate||0.45% p.a.|
|Tenure of deposit||6 months|
|Total interest earned||US$45|
Are there any risks involved with foreign currency fixed deposits?
Like its SGD counterparts, the foreign currency fixed deposits are considered safe, secure and low risk investments. However, foreign currency FDs are subject to foreign exchange risks. This is because once the deposit tenure ends, the funds are converted back to SGD at the prevailing exchange rate — which may be higher or lower than the rate your SGD was converted at the start of the tenure.
So if your selected foreign currency rises in value against the SGD, you’d reap a profit from the exchange rate on top of the guaranteed interest accrued. But if the foreign currency decrease in value against the SGD, you’ll lose a portion of the funds from the currency conversion.
Example of how a difference exchange rate affects foreign currency fixed deposit
To give you a better idea of the risk that comes with foreign currency fixed deposits, we’ll illustrate how the difference in exchange rate can result in an overall profit or loss. In this examples, we’ll assume that you’ve placed a fixed deposit of USD 20,000 over a 6-month term with a 0.45% p.a. interest.
Here’s how your total earnings will look like if the value of USD strengthens against the SGD after 6 months:
|Description||Start of deposit tenure||Upon maturity of deposit tenure|
|Prevailing exchange rate (SGD/USD)||1 SGD = 0.732 USD||1 SGD = 0.722 USD|
|Value of US$20,000 in SGD||S$27,320||S$27,700|
|Difference from exchange rate||+S$380|
*Exchange rate is based on the mid-market rate as of 10 October 2020. Make sure to check directly with your bank for its offered rates.
In this case, you’ll earn S$380 on top of the S$62.32 interest earned, resulting in a total of S$442.32 bonus from this investment.
In the event of an economic downturn that result in the weakening of the USD against SGD, your deposit will result in an overall loss as illustrated here:
|Description||Start of deposit tenure||Upon maturity of deposit tenure|
|Prevailing exchange rate (SGD/USD)||1 SGD = 0.722 USD||1 SGD = 0.732 USD|
|Value of US$20,000 in SGD||S$27,700||S$27,320|
|Difference from exchange rate||-S$380|
*Exchange rate is accurate as of 10 October 2020. Make sure to check directly with your bank for its offered rates.
Even with a US$45 (S$61.47) interest earned, it’ll still result in a total loss of S$318.53 from this investment.
How to find the best foreign currency fixed deposit account
Like most financial products, there is no best foreign currency fixed deposit account. The account that suits your needs and circumstance the best is the one you should choose. But what is best for you, might not be best for someone else. You should look for:
- A competitive interest rate
- A competitive foreign exchange rate
- A term length that suits you
- A minimum deposit amount you’re comfortable with
Ask these questions when you’re comparing between foreign currency fixed deposit offers
- What is the interest offered?
- Does the bank offer the currency you wish to deposit?
- What is the exchange rate offered?
- What happens if I break the term of your deposit?
- Can I withdraw a portion of the deposit without incurring a penalty?
- How often will I receive statements?
- Can you easily check on the balance in my account and how easy is it to manage other features (for example, with a mobile banking app in-line with a digital bank)?
- What happens to the deposit when it matures? For example, will it automatically roll over into another fixed deposit or converted back to SGD?
What are the benefits of foreign currency fixed deposit accounts?
- Low-risk investment. These types of accounts are widely considered to be a safe, low-risk investment as they offer a guaranteed return through a fixed interest rate.
- Higher interest rates. A foreign currency fixed deposit account offers a good opportunity to boost your savings quicker than a regular savings account.
- Zero fees. Foreign currency fixed deposits are widely accessible investment options since they are fee-free and offered by most banks in Singapore.
- Enforced discipline to save. If you have a chunk of money you know you won’t need for a while, placing it in a foreign currency fixed deposit can help remove the temptation to spend the money since you’ll need to pay a fee if you wish to withdraw before the deposit’s term is complete.
- Possibility of a better exchange rate. You may reap a sizeable profit if the exchange rate for your foreign currency strengthens against the SGD upon maturity of your fixed deposit.
What should I look out for?
- Liquidity. You won’t be able to access your funds for a specific period without incurring a penalty.
- Exchange rate fluctuations. Changes in exchange rates can affect the value of your foreign currency significantly.
- The interest rate will not change even if the market improves. While having a fixed interest rate may be a good thing, but if you placed a fixed deposit at a less competitive rate, your money will be locked in at that rate for the entire tenure.
How do I open a foreign currency fixed deposit account?
To open a fixed deposit account, you’ll need to apply in-person. Once you’ve compared your options, simply head down to the nearest branch of the bank or lending institution. Before that, make sure you meet the bank’s eligibility criteria and have all the relevant documents on hand.
The specific eligibility criteria may vary from bank to bank, but you’d typically need to meet these requirements:
- Age. You must be at least 18 years of age (minors below 18 years of age can usually open the account with the parent or legal guardian who is at least 21 years old).
- Residency. Singapore citizen, permanent resident or foreigner.
Make sure you bring along the following documents when you apply:
- Singaporeans and permanent residents. ID and the latest copy of a proof of residence (e.g. local utility bill, local telecommunication bill, local bank statement)
- Foreigners with a valid work permit. Passport, proof of residence and a valid permit (e.g. Student Pass/Dependent Pass/S Pass or Long-Term Visit Pass).
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