Australian dollar attracts NRI investors

If you are an Indian working outside the country and investing your money in the US dollar denominated fixed deposits in Indian banks, it might be a good idea to consider investing in Australian dollar instead. According to the banking sources in India, increasing number of non-resident Indians (NRIs) have been converting their US greenback held foreign currency non-resident deposit in banks (FCNR-B) into high yielding Australian dollar. This is because compared to the US and the UK, interest rates remain high Down Under resulting in extra earning of interest from Australian dollar-denominated deposits.

In recent times, Australia has been quick to raise the interest to tame the inflation while the UK and the US - struggling to get over the economic crisis of 2008 - have been too cautious with their low interest rates of nearly zero! Europe, which too has been hit by the crisis one after the other, recently raised rates for the first time since 2008 but the deposit in Euro is not attractive given the sea-saw battle with the US dollar, uncertainties over the economies of euro zone countries such as Portugal, Ireland, Greece and Spain, now sarcastically derided as PIGS.

Indian investors holding foreign currency non-resident account are allowed to hold their deposits in any of the six currencies: Japanese yen, pound sterling, Canadian dollar, Australian dollar, Euro and American dollar. However, the investors need to watch out for possible interest rate hike in the US, UK and Europe, although experts do not believe that these hikes, if at all they take place, would be anywhere near prevailing rates in Australia.