Foreign Currency deposits

NEW -> Contingent Buyer Assistance Program
<p>I have been a customer for over 3 years in a couple foreign currency CDs and a commodity market-safe CD. I kid you not, I was able to speak to their president, Chuck Butler, with 1 phone call to their 1-800 number. They are legit and it's quick and easy to get online access to all your accounts. They emailed or called me within an hour for each of the 3 bankwires I've sent in the past. Really great service.</p>

<p>The one rude awakening (for me, at least) is that you will get a 1099 for the interest you earn each year, so keep that in mind if you're looking at one of their high-yield products. I hadn't considered it since the CDs roll over every 3 months. I'm not sure if you get a 1099 for the currency appreciation, if there is any, since I haven't cashed out any CDs yet.</p>
 
i'm just fooling around. i've heard of this before...


for credit card and wireless phone companies where customer service is a big issue, you can sometimes ask to speak with the president. they will transfer you over to a special customer service dept which is under the office of the president as opposed to customer service. they often have more authority to provide remedies. its not the actual president of the company as in your case but similar idea.
 
Daedalus, could you tell us which of their products you invested in, and why?





I'm looking to shift about half of my cash reserves into foreign currency this year and am still scratching my head on which products/currency to use.
 
<p>I won't recommend the dart toss I pulled to get in my first CD. I was a confident dollar bear (still am) and heard about Everbank via a newsletter I read. At the time South African Rand was the highest-yield CD they had, at around 7.75. I thought any currency had to be better than the USD, so I jumped in. Bad timing. I've been paying taxes on the interest every year while watching the exchange rate move against me. All told I've made maybe 2%/year on average overall on ZAR.</p>

<p>My 2nd play was a little more opportunistic, though still not quite well educated. They added Icelandic Krona to their mix at some point, paying ~13%, and I was watching it for a while. Soon after they began offering it the currency took a nosedive of over 10%...just way out of line. I couldn't find any headline news to explain it, so I took it to be a temporary discount and I wired funds in one day (with no warning to Everbank--kind of cavalier in hindsight really). They called and asked what I wanted to do with it, and I had them put it in ISK for me. ISK regressed and has been green to date, but it has not been a mover like the euro, canadian $, NZ $, etc. I'm happy with the 12% interest, and the currency move is gravy.</p>

<p>Now I am 2 months away from having an MBA and I know a lot more. Trade deficits and inflation rates matter! I also know how to calculate covariances, standard deviations and betas. The Brazilian Real is tempting me with that fat return, but this time I won't buy it without doing a lot of analysis first. The euro or australian dollar may still be the best investment. I LOVE the Chinese Yuan too. It's undervalued by at least 30%, probably more, but still restrained quite a bit from where it "ought" to be. Some day they will have to let it float much more freely, but when? And what if the CCP pulls a Chavez and declare foreign holdings worthless? I really don't think they will, but the black swan is always out there.</p>

<p>The last product I got in on was a "MarketSafe" CD. It's a product for people who like the idea of saying they play with big boy investments, but without the big boy risk. It's a 3-year CD that guarantees a return of your capital in the worst case, while giving you access to upside moves in whatever item it tracks--in my case the Dow Jones commodity index. It's a very watered down vehicle. They take most of the invested capital...probably about 85% of it, and put them into bonds. That's how they guaranty a return of your principle. The other 15% is used to buy long-term options on the index (probably at least 1 set of contracts per year). If it moves up big they can make a nice profit. If not I've only lost out on opportunity costs and inflation. </p>

<p>Now ask me about buying loonies when gold was trading under $300/oz. :)</p>
 
Regarding RMB, I was under the impression it is pegged against the dollar? You are right of course, many people have said RMB should be around 1:4 instead of 1:7.5 right now. At 1:4 rate, I don't think we will see too many Chinese in LA any more, one can make close to 30K USD in major Chinese cities with a US degree under the current rate (after tax no less), at 1:4, that will raise to 60K after tax, given the overall lower cost of living, probably we will see a lot of Chinese selling their houses.
 
<p>It floats a bit. Back in 2005 (?) they began to peg it to a basket of undisclosed currencies, the largest of which is the USD (prior to that it was in lock-step with the USD). I was kicking myself because 2 weeks before they let it move I considered buying a CD--actually talked to my fiancee about doing it, but put if off. The basket components and weightings can change any time. I am certain they will eventually lighten the USD weighting. It'll be painful, but the longer they wait the more painful it will be.</p>

<p>I was in Shanghai in May. 3rd time in 12 years. I could not believe how full the skyline is with skyscrapers. In 2001there was only the Pearl of the Orient and nothing else over 20 stories as I recall.</p>
 
I will be in Shanghai quite often starting in December. I still have a family house in Shanghai. One thing, if you think OC real estate is crazy, wait until you go to Shanghai. My family house (because it is a old french style house with front and backyard and a car port,) is currently valued at 2.1 million USD !!!, and it goes up like 5% every month. I know Chinese economy is on fire, but I often wonder who can afford 2.1 million house (or what caused it to go to 2.1 million in the first place) in Shanghai. We leased it out to GM, so I can't move back in until 2009.
 
Is there a US bank with foreign currency CD in RMB?





I bought some RMB with cash from my recent visit to Beijing, so in case if exchange rate shoots up I still have some $$ to spend for my next visit, hehe.
 
<p>Everbank is a US bank...or do you mean one with local branches? I know you can buy/sell currencies at some branches of large banks. My local BofA will trade in the more common currencies. Might be a good idea to call them first if you're looking to buy a large amount. Keep a close eye on the spread--it's like dealing with a REALTOR (R). If you bought currency from a kiosk in Beijing you probably lost around 3% of the spot value in the transaction, and you would lose about the same amount when you trade back. I haven't shopped around at B&M banks much, but I know the local BofA had a terrible (for me) commission built into its rates when I did check. Everbank will get you a CD within 1% of spot price each way.</p>
 
Momo, reminds me of the philippine pesos we found we had from our trips the other day. We got them for 56 PHP to $1 in 2004, now 44 PHP to $1 today. Theres talk about 43 at the end of the year and even lower next year. Amazing how much the dollar is tanking! Oh but by cranking interest rates down the Fed is keeping inflation in check...ya right.
 
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