We read about it every day – the euro plunges against the dollar, the yen hits a new high against the dollar, then the yen falls when the Bank of Japan intervenes in the market because the value of the yen has become too high.
It would be great to be able to take advantage of these currency fluctuations, or, at least, to protect your savings from losing value when a currency does.
In Japan, consumers do this routinely as banks allow them to hold accounts in several different currencies, and to switch them from one to another without charges. So much money is held by consumers in this way that foreign exchange dealers refer to large movements in and out of the yen by Japanese consumers as “wannabe trades.”
But the idea has finally taken hold outside of Japan, and an increasing number of banks are offering multi-currency accounts to their customers. These usually take the form of non-interest bearing checking accounts, with the possibility of transferring funds into a savings account either in the specific currency or not. Your expenses for maintenance of a multi- currency account are normally more favorable in comparison with keeping multiple currency accounts. Your have only one account, so only one service fee, one minimum deposit, etc.
HSBC Offshore, for example, offers multi-currency checking accounts in 19 different currencies, including the Chinese yuan and the Israeli shekel. Open your checking account in the currencies of your choice. With your account comes a debit card in dollars or euro or yen, depending on what you prefer – it’s usually wise to keep at least one of your multi-currency accounts in one of these major currencies just in case things don’t go well with the rest of the world.
Then, you can link your multi-currency checking accounts to savings accounts either in the same currency, or in one of the major currencies. Rates for these including bonus go up to GBP 0.80 % AER/Gross, USD 0.20 % AER/Gross, EUR 0.40 % AER/Gross. (Bonus interest in addition to standard interest) is paid for any calendar month in which you make no withdrawals).
Citibank in the UK offers a similar solution. The bank has multi-currency checking accounts in 19 different currencies including the Polish zloty (very strong in recent years), and the UAE’s dirham. Again, a dollar or euro-based debit card is offered, although it can be used to withdraw in any currency across the world. One difference is that Citi will pay interest on these accounts if the client maintains a balance above $100,000 (or equivalent in the given currency), and Citi offers access to a range of investments in different currencies.
Both of these offers, as do most multi-currency offers, have online banking components that are completely free. This enables you to shift your holdings from one currency to another in real time. Bear in mind: Buying a dollar-denominated item online with yen actually does save you money when the yen is strong, so this offers real advantages. And when the yen falls, you simply shift the funds back the other way.