I’ve been watching these rates for a while now and they haven’t changed. SBI Shinsei Foreign Currency Time Deposit (“With Special Interest Rate Plan”) offers suspiciously high annual rates for 1-month time deposits.
USD 10.000 %
AUD 8.000 %
EUR 6.000 %
GBP 8.000 %
NZD 8.000 %
ZAR 20.000 %
CNY 10.000 %
TRY 30.000 %
A. How do they even manage this? These are way higher than the bonds offered in said countries.
B. Is there some extra risk here other than the potential of the volatile exchange rate fluctuations? I see that it’s not protected by deposit insurance, but feels like I’m missing something.
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Too good to be true for 1-month maturity deposits?
2 comments
You’re misreading the interest rates.
For instance for USD it’s 3.5% p.a. (per annum) for a 1 month deposit. So if you invested $100 in a year you would have $103.50. The monthly return would be $3.50/12 or about $0.29
https://www.sbishinseibank.co.jp/english/rate_list/gaika.html
And the way they do it is investing the money you put into deposits in bonds.
Well, the catch is “Deposit ONLY from Yen Saving Deposit”
So this “Special Interest Rate Plan” is only available if you are making the placement from JPY. There is the “spread” that they will make from converting JPY to whichever currency you are making the placement in.
Also, do keep in mind that interest payments is subject to 20.315% withholding tax (national tax 15.315% and local tax 5%).