Dual Currency Investment

Hi Mr Tan,

I started investing in a SGD/AUD DCI 3 years ago, while waiting for the AUD to depreciate to a more favourable level.

I did a few rounds of DCI at an interest rate of 5%+ pa for 1-month tenure and then went into 1-month SGD time deposit (~1.5% pa) for manymonths when the AUD was too high as I did not wish to get converted at that level.

I went into a 1-month DCI again after the AUD came down and got converted to AUD 2 years ago. I then switched between AUD (base)/SGD (alternate) DCI earning interest rates of 5.5% to 7.5% pa. and 1-month AUD time deposit (5.2% to 5.8% pa) when the spot rate was too far away from my conversion strike price (tobreakeven).

In 26 months, I made about 5.13% pa from my initial principal.

I was converted back to SGD at a profit (strike price higher than previous conversion rate), was in SGDbase/AUD alternate DCI for a couple of months, got converted to AUD, and was subsequently converted back to SGD at a profit again.

Now with the AUD near an all-time high and being so volatile, I've gone into a DCI paired with EUR at 4.8% p a for 1-month tenure. This is a temporary measure while I wait for AUD to come down to a more comfortable level before I enter into SGD/AUD DCI again.

Eventually, I wish to get converted to AUD at a favourable exchange rate and intend to place the funds in an AUD time deposit and stop the DCI.

On hindsight,I should have done this earlier which will earn me more in terms of fixed deposit interest without takingrisks. But I couldn't tell back then that the AUD would strenthen so much.

REPLY

Congratulations on selecting the right currency and making the right timing.

I wonder, if you had invested in straight AUD during this period, would you have earned a much higher return? I suspect that it would have been much better for you. Maybe, you could do some calculation and share the results with me?