Advertisement

C S

14 Nov 2019

∙

Is "Never convert currency in pursuit of extra interest" solid advice?

I once came across this idea1 but never took time to do the calculations myself. Would love to hear your thoughts, additional resources on this.

We could probably peg the discussion to "stronger" currencies if it helps.

(For reference, there was this recent answer by Kelly Trinh2 that addressed this.)

1 https://twitter.com/cperciva/status/11593586767...
2 https://seedly.sg/questions/is-it-possible-to-o...

2

Discussion (2)

What are your thoughts?

Learn how to style your text

Kelly Trinh

14 Nov 2019

Backoffice technical at financial services firm

Well I'd say this Kelly character has probably lost money trying out this stunt himself and on that basis alone is enough to say he is probably right lol lol lol.

More seriously - a theorectical reason why it wouldn't work is that a big institutional investor would be able to exploit this on a large scale and through their actions move the FX rates to close any arbitrage opportunity.

On a more practical sense - trying to exploit without access to forward FX market would mean it is uncovered and so there is a chance you could get killed by FX moves (historical examples would be where folks tried borrowing in low interest rate dolllars and got burnt when their home currency moved against them).

But - don't want to crowd out other voices so happy to hear others chime in on possibilities

Reply

Save

View 1 replies

Write your thoughts

Related Posts

I just ORD-ed and I am really interested in opening up a foreign currency fixed deposit on POSB. Any tips or advice?

With regards to FSMone's RSP foreign currencies ETF, would FSMone auto convert SGD to the respective currencies for the RSP or do I have to manually convert money to the respective currencies?

Hi- Anybody knows why Japanese Yen is a safe haven for currencies? Arent their interest rates at 0 and their economy experiencing deflation- won't the currency experience depreciation in the long run?

Hi there, I have a 20k with OCBC savings account and the interest is very low. I'm thinking to close this savings account so that I can put this amount of money to get more interest. Any advice?

Hi Seedly community, would like some advice for my parents housing loan. was shocked that my parents are financing a $75,000 loan at a interest of 4.35%, for the next 7-8 years. Any advice?

Related Posts

I just ORD-ed and I am really interested in opening up a foreign currency fixed deposit on POSB. Any tips or advice?

With regards to FSMone's RSP foreign currencies ETF, would FSMone auto convert SGD to the respective currencies for the RSP or do I have to manually convert money to the respective currencies?

Hi- Anybody knows why Japanese Yen is a safe haven for currencies? Arent their interest rates at 0 and their economy experiencing deflation- won't the currency experience depreciation in the long run?

Hi there, I have a 20k with OCBC savings account and the interest is very low. I'm thinking to close this savings account so that I can put this amount of money to get more interest. Any advice?

Hi Seedly community, would like some advice for my parents housing loan. was shocked that my parents are financing a $75,000 loan at a interest of 4.35%, for the next 7-8 years. Any advice?

Advertisement