Interest rate on Australian Dollar fixed deposit declined

We heard of negative interest rates in some countries. This means that banks have to pay their central bank interest amount when placing money with the central bank. This affects the interest payments to fixed deposit holders of these banks.

When the Reserve Bank of Australia (RBA) cut its cash rate to 1.75% this month, payment of interest on fixed deposits (FD) in Australia dollar (A$) term was reduced accordingly.

When I placed money in A$ FD in May 2013, the interest rate on monthly row over FD was 2.245% p.a. Three (3) years later, this interest rate is now at 1.365% p.a.

With the A$ now below $1.00 against Singapore dollar, this investment suffers double whammy.

It will be a long while before we can see the glorious days of investing in Australian dollar investments. That would be before the Global Financial Crisis of 2008/09. The RBA’s cash rate was 7.25% p.a. in 5 March 2008!

Copyright © 2016, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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