Foreign Currency On Deposit

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I'm considering opening an Australian Dollar bank account (outside Ireland), as a protection against the devaluation of a (second tier) Euro within PIIGS and am a little unsure of the computations. Leaving exchange rate fluctuations aside, can somebody explain to me how it would work in actual savings terms if I do the following:-
1) Move €100 to AUD at an exchange rate of 1:1
2) A "new" Euro is created in PIIGS at a devalued rate i.e. I assume revalued against the AUD
3) I move my AUD back to the new PIGGS Euro

Have I protected myself against devaluation, should I have left my €100 in my Irish bank account?
 
You have protected yourself against any potential devaluation if you convert to AUD.

AUD has soared in value lately, you take on big AUD EUR FX risk.
 
Hi butterscotch, that's the theory all right. The rate isn't quite as bad as 1:1 just yet mind you! It will cost you a bit transferring money to an AUD a/c because it's outside of SEPA/EU &c, I think I paid about E30 the last time. The other thing that you'll have to decide for yourself is when you think the new PIIGS currency will be ripe / fully devalued, i.e. if such an event were to occur, the new currency would lose a significant proportion of its value that day however because it wouldn't be anchored to anything vaguely resembling security, i.e. USD or DM, it would continue to decline in value over time. By the way, St George (backed by Westpac) have a good a/c which pays around 3.5% with no charges.
 
Thanks Ciaran T and Rekhib,

Can you give me more details on St. George and Investec that you mentioned (web link?)

Finally, what is the best way to maximise my exchange rate when transferring to my new AUD account?
 
Use a currency broker, like www.currency.ie

As per an article on the Sunday Independent, Investec ( www.investec.ie ) pay 5.75% on AUD 1 year term deposits:

Investec's 12-month fixed currency deposit accounts pay 1.1 per cent interest on US dollars, 1.85 per cent on sterling, 5.75 per cent interest on Australian dollars and 0.55 per cent interest on Swiss francs.
Click to expand...
 
Thanks CiaranT,

This is all new to me, so excuse all the questions. I assume therefore that it is cheaper to use currency.ie than to go through banks. Can someone explain for me how I get my current savings (in € in bank A to my new AUD account in bank B) via currency.ie. A step by step would be useful.
Thanks,
 
Australian dollar euro exchange rate

Call them and fund out, they're in Dublin

Outlook for Australian dollar us probably brighter than euro but you never know what's around the corner.

Interest rate will be higher but you will pay tax on it like anywhere else
 
Here is the link for St George's a/cs: [broken link removed] The 5.75% is far more competitive than the 3.5% but the 3.5% is instant access, it's online and has no fees. As ecoman mentioned, we're in turbulent times so instant access, IMO, is of paramount importance. Also, Ciaran which deposit protection scheme would an Investec AUD FX deposit account fall under?

The last time I used a currency broker, I actually got a better rate with my own bank. Do shop around because the amount that you're transferring will greatly impact the rate you can secure. Generally the currency brokers work by providing an account for you to transfer the money to, along with a wire instruction that you complete, i.e. with your receiving account details, you send the money off and it arrives quick smart, far quicker than your bank I would hasten to add.
 
rekhib said:
Here is the link for St George's a/cs: [broken link removed] The 5.75% is far more competitive than the 3.5% but the 3.5% is instant access, it's online and has no fees. As ecoman mentioned, we're in turbulent times so instant access, IMO, is of paramount importance.
Click to expand...

For St George, one of the application conditions is that you need to be an Australian resident to open an a/c..
 
daymoh said:
For St George, one of the application conditions is that you need to be an Australian resident to open an a/c..
Click to expand...

Bizarre. I'm an Irish resident and they even post my statements to my Dublin address. Apologies for the mis-direction if that is the case.
 
Ciaran,

1) Who's guarantee is this?
2) When does the guarantee end?
3) What is the value of the guarantee if it is a joint account?
 
Apparently, if you open a foreign account, you are liable for tax. Does this mean tax on the interest (like DIRT) or does it mean that the lump sum that you lodge is taxed as if it were income? If so, maybe you could end up paying 20% tax?
 
butterscotch said:
Ciaran,

1) Who's guarantee is this?
2) When does the guarantee end?
3) What is the value of the guarantee if it is a joint account?
Click to expand...

1) FSA
2) It doesn't
3) From January 1st 2011, the FSA guarantee 100,000 EUR or equivalent currency in FSA regulated banks. I guess it is 200,000 EUR for a joint account.

Savvy Row said:
Apparently, if you open a foreign account, you are liable for tax. Does this mean tax on the interest (like DIRT) or does it mean that the lump sum that you lodge is taxed as if it were income? If so, maybe you could end up paying 20% tax?
Click to expand...

You must declare your deposit interest to the Revenue and pay 27% DIRT.

You are exempt for any local savings interest tax in another country as a non resident.
 
Thanks again Ciaran,
Just to be absolutely clear, If I open an Investec AUD 12-month fixed currency deposit account @ 5.75 per cent interest, then all three answers above will apply.
What is FSA?
 
it seems odd to me that Investec are offering different deposit rates on different currencies ... is it connected with prevailing dep rates in Australia ? While there is FX risk in transferring to any other currency, seems like the (relatively) high rate on offer for the fixed term AUD Investec account could act as a buffer should the currency drop a lot .... am I missing something ?
Also - off topic slightly I know ... anyone know what the guarantee scheme in operation in Switzerland is ? (as I write this question I'm thinking how crazy this all is ... questioning the stability of UBS ... but i suppose that's just the stage we are at!)
 
just answered the swiss question I think .. in case anyone is interested:

Deposits on a Swiss bank account are guaranteed by a collective organisation financed by the banks. The limit is of CHF 100'000 per account holder (equivalent to $90,000 or EUR 68,000 or £63,000). It also protects non-Swiss residents who have accounts in Switzerland. It also covers deposits on foreign currencies, up to the equivalent of CHF 100'000. If a client has several acccounts in the same bank, the global limit is CHF 100'000. If a client has several accounts in different banks, the limit is CHF 100'000 per bank.
 
Ciaran,

Looking at the Investec.ie website, I see that they mention "In July 2002 Investec became the first South African group to list in London and Johannesburg by implementing a Dual Listed Company's Structure"
Which of the companies is the one that operates in Ireland?
Secondly, If you go to the credit ratings on the same website, what interpretation should I take from this regarding risk on an AUD deposit account for 12 or 24 months?
 
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