By guest contributor Kevin Toohey, General Manager, Atchison Consultants
Through trade and capital flows, individuals and businesses can accumulate significant capital in overseas jurisdictions which is held in short-term deposits in foreign currencies. Often the intention will be that the working capital will be held on deposit temporarily in anticipation of future activity.
There are three primary considerations:
- interest rate available
- access to capital
- security of capital
Typically access and security of capital will rank higher in importance to the levels of interest rate received.
Major banks offer term deposits denominated in the major foreign currencies across a range of terms, allowing depositors to balance timeliness of access to capital with generally higher rates of interest.
Nominal interest rates offered in most currencies are currently negligible. By way of example HSBC Australia offer a number of foreign-denominated deposit accounts, all with negligible interest rates:
