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<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Aussie, NZ dollars lose their shine
</TR><!-- headline one : end --><TR>Investors cautious after recent beating both currencies took </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Grace Ng
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE gyrations of the Australian and New Zealand currencies - mostly downwards - of late have left Mr Kenneth Ang a bundle of jangled nerves.
The father of two kids studying in Australia and New Zealand put a 'very large sum' of cash into an Aussie-dollar fixed deposit in a Singapore bank about six months ago when the Aussie was trading at about $1.295 to the Singapore dollar.
He has seen the value of the investment plummet in Sing dollar terms.
The Australian dollar, which had soared as high as $1.349 to the Sing dollar in November last year, dropped to $1.2309 yesterday - close to its lowest level in almost in a year. It sank even lower, to $1.22, last week, sending Mr Ang's 'heart into his stomach'.
'At that exchange rate, my six-month deposit would not have yielded any profit at all, because the drop in the Sing dollar value would have wiped out my interest rate gains,' he said.
Until this month, banks in Singapore said investors have been attracted by the relatively high rates of over 6.3 per cent for their Aussie-dollar deposits and well over 7 per cent for the New Zealand-dollar ones - a far cry from the paltry 1 per cent rates on Singapore-dollar deposits.
Mr Nicholas Tan, OCBC's head of Group Wealth Management, said: 'We have seen healthy growth in our new Australian- and New Zealand-dollar fixed deposits in the past few months.'
But over the past three weeks, two banks have noted 'more cautious sentiment' among investors about parking any fresh funds into the Aussie and kiwi.
In particular, high net-worth clients who had been active participants in the 'carry trade' - using ultra-cheap yen loans to fund investments in 'high-yield currencies' of countries such as Australia and New Zealand.
Benchmark interest rates there are among the highest for medium economies - boosted by the commodities boom, since both are major exporters of metals and other resources.
Investors have jumped out of these deposits after the beating that the two currencies took in recent weeks amid speculation that the Reserve Bank of Australia and New Zealand's central bank may cut interest rates to spur slower economies.
Economists such as Mr Callum Henderson, Stanchart's head of forex strategy for global research, expects New Zealand interest rates to be cut by one percentage point from 8 per cent currently.
Traders expect the Australian central bank to cut interest rates - currently at a 12-year-high of 7.25 per cent - by 1.09 percentage points over the next year, according to a Credit Suisse Group index based on interest-rate swops.
OCBC forex strategist Emmanuel Ng says both the Aussie and NZ dollar have the potential to regain ground in relation to the Sing dollar in the next few months. But they may fall again after that as the global slowdown deepens.
In Singapore, interest rates on Aussie-dollar time deposits appear to have been lowered. For a six-month Aussie deposit of $50,000, the current rates at some banks is 5.93 per cent, down from over 6.5 per cent earlier this year.
But DBS sees an opportunity to attract depositors with new promotional rates. These include 7.28 per cent for a A$50,000 six-month deposit, and 8.13 per cent for a NZ$50,000 deposit. [email protected]
</TR><!-- headline one : end --><TR>Investors cautious after recent beating both currencies took </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Grace Ng
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
<TABLE><TBODY><TR><TD>
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE gyrations of the Australian and New Zealand currencies - mostly downwards - of late have left Mr Kenneth Ang a bundle of jangled nerves.
The father of two kids studying in Australia and New Zealand put a 'very large sum' of cash into an Aussie-dollar fixed deposit in a Singapore bank about six months ago when the Aussie was trading at about $1.295 to the Singapore dollar.
He has seen the value of the investment plummet in Sing dollar terms.
The Australian dollar, which had soared as high as $1.349 to the Sing dollar in November last year, dropped to $1.2309 yesterday - close to its lowest level in almost in a year. It sank even lower, to $1.22, last week, sending Mr Ang's 'heart into his stomach'.
'At that exchange rate, my six-month deposit would not have yielded any profit at all, because the drop in the Sing dollar value would have wiped out my interest rate gains,' he said.
Until this month, banks in Singapore said investors have been attracted by the relatively high rates of over 6.3 per cent for their Aussie-dollar deposits and well over 7 per cent for the New Zealand-dollar ones - a far cry from the paltry 1 per cent rates on Singapore-dollar deposits.
Mr Nicholas Tan, OCBC's head of Group Wealth Management, said: 'We have seen healthy growth in our new Australian- and New Zealand-dollar fixed deposits in the past few months.'
But over the past three weeks, two banks have noted 'more cautious sentiment' among investors about parking any fresh funds into the Aussie and kiwi.
In particular, high net-worth clients who had been active participants in the 'carry trade' - using ultra-cheap yen loans to fund investments in 'high-yield currencies' of countries such as Australia and New Zealand.
Benchmark interest rates there are among the highest for medium economies - boosted by the commodities boom, since both are major exporters of metals and other resources.
Investors have jumped out of these deposits after the beating that the two currencies took in recent weeks amid speculation that the Reserve Bank of Australia and New Zealand's central bank may cut interest rates to spur slower economies.
Economists such as Mr Callum Henderson, Stanchart's head of forex strategy for global research, expects New Zealand interest rates to be cut by one percentage point from 8 per cent currently.
Traders expect the Australian central bank to cut interest rates - currently at a 12-year-high of 7.25 per cent - by 1.09 percentage points over the next year, according to a Credit Suisse Group index based on interest-rate swops.
OCBC forex strategist Emmanuel Ng says both the Aussie and NZ dollar have the potential to regain ground in relation to the Sing dollar in the next few months. But they may fall again after that as the global slowdown deepens.
In Singapore, interest rates on Aussie-dollar time deposits appear to have been lowered. For a six-month Aussie deposit of $50,000, the current rates at some banks is 5.93 per cent, down from over 6.5 per cent earlier this year.
But DBS sees an opportunity to attract depositors with new promotional rates. These include 7.28 per cent for a A$50,000 six-month deposit, and 8.13 per cent for a NZ$50,000 deposit. [email protected]
