FX fixed deposits have more uptakes in Singapore

As interest rates continue to rise, more Singaporeans are choosing to deposit their money in fixed deposits in foreign currencies. Banks have reported a surge in take-up rates for foreign currency fixed deposits last year, with the US dollar, Australian dollar and British pound among the most popular choices. Some of these currencies now offer higher fixed deposit rates than Singapore dollar deposits, which are currently at 4%.

For example, OCBC offers a promotional rate of 5.08% a year for a US dollar fixed deposit with an eight-month tenor, subject to a minimum of US$20,000. DBS, the largest bank in Singapore, offers 4.41% per annum for a six-month US dollar fixed deposit below S$10,000. UOB customers get 4.34% a year for a placement below US$50,000 over six months.

Banks say that the growing interest in foreign currency fixed deposits is due to favourable exchange rates and a strong Singapore dollar, as well as the need for foreign currency for overseas investments, remittances or education expenses. DBS reported that the number of foreign currency fixed deposit placements went up by ten times in the second half of 2022 compared to the previous six months. UOB said its foreign currency fixed deposit portfolio grew by more than 150% last year.

As the investment climate remains challenging and interest rates stay high, banks expect demand for foreign currency fixed deposits to continue this year, particularly in the first half.