Yea or nay? Prestia's USD 3 month time deposits at 6.5% annual interest?

[ChapInTokyo]

What's the general consensus of the veterans regarding USD time deposits at Japanese banks?

I just saw Prestia's currently offering a pretty generous 6.5% annual interest on a 3 month USD time deposit, provided you send them the funds in USD from a competing Japanese bank.

https://www.smbctb.co.jp/en/timedeposit2404/

Since I feel that the fed will not decrease rates until the fall, it looks like a fairly 'safe' way to earn some interest on USD funds which I am thinking of putting into eMAXIS Slim Japanese bonds index fund once BOJ starts to increase the rates a bit more here in Japan. Apparently, once the 3 months is up, they will simply put the money into your multi-currency account in USD still, rather than incurring currency conversion fees for converting to yen.

Whaddaya think? Good idea or bad? One thing that is making me think twice is the requirement that you use their phone banking service to apply for this time deposit (ie. you can't simply do it via the web). I hope that this isn't simply a way for them to talk me into investing in their old school high expense ratio income funds... or is that exactly what it is?

[William]

SBI Shinsei Bank also offers similar products. Interest for funds from JPY to USD is higher than having USD from the beginning.

I don't know the rationale behind it, but it seems Prestia is basically doing the same thing. Although they don't start from JPY, they do require the USD funds to come from somewhere else. So, for whatever reasons, it seems the banks want to get more foreign funds on their book.

I used the SBI Shinsei Bank scheme (from my JPY funds to USD/EUR funds) when planning trips abroad. Now, I'm only using their scheme from EUR/USD, with lower interest. That being said, those interest rates are still higher than the interest offered for JPY funds.

[ChapInTokyo]

SBI Shinsei Bank also offers similar products. Interest for funds from JPY to USD is higher than having USD from the beginning.

I don't know the rationale behind it, but it seems Prestia is basically doing the same thing. Although they don't start from JPY, they do require the USD funds to come from somewhere else. So, for whatever reasons, it seems the banks want to get more foreign funds on their book.

I used the SBI Shinsei Bank scheme (from my JPY funds to USD/EUR funds) when planning trips abroad. Now, I'm only using their scheme from EUR/USD, with lower interest. That being said, those interest rates are still higher than the interest offered for JPY funds.

Thanks. I’m in the process of opening an account at SBI Shinsei Bank too so I’ll definitely compare their deals on USD time deposits too…

[Tsumitate Wrestler]

I would not bother, and just use a Ultra-short Bond index instead.

Here is a list of YEN and USD options on both exchanges.

https://myindex.jp/search_fund.php?b=3180&e=111

[ChapInTokyo]

Wow looks like the CFOs at the major Japanese corporations are bracing for the yen to strengthen against the dollar during the rest of fiscal 2024.

Japan companies brace for forex bumps, assume 144 yen-dollar rate
Market gyrations prompt cautious yen outlook for earnings forecasts
https://asia.nikkei.com/Business/Market ... ollar-rate

[Deep Blue]

Wow looks like the CFOs at the major Japanese corporations are bracing for the yen to strengthen against the dollar during the rest of fiscal 2024.

Japan companies brace for forex bumps, assume 144 yen-dollar rate
Market gyrations prompt cautious yen outlook for earnings forecasts
https://asia.nikkei.com/Business/Market ... ollar-rate

They have no more idea than the rest of us. They always provide guidance based on a more conservative assumption than spot - to give themselves a nice cushion.

[Tsumitate Wrestler]

Wow looks like the CFOs at the major Japanese corporations are bracing for the yen to strengthen against the dollar during the rest of fiscal 2024.

Japan companies brace for forex bumps, assume 144 yen-dollar rate
Market gyrations prompt cautious yen outlook for earnings forecasts
https://asia.nikkei.com/Business/Market ... ollar-rate

They have no more idea than the rest of us. They always provide guidance based on a more conservative assumption than spot - to give themselves a nice cushion.

Indeed. The market is pricing in a US rate cut in Sep-Nov. {See forecasts -> https://www.cmegroup.com/markets/intere ... -tool.html}

They are expecting a rebound after that announcement. Pretty standard stuff.

If someone bought 2563 this month instead of 1655 I would think it a reasonable enough bet. {Buying a hedged ETF, instead of an unhedged one}. Assuming they planned to return to unhedged at a later date.

[Deep Blue]

If someone bought 2563 this month instead of 1655 I would think it a reasonable enough bet. {Buying a hedged ETF, instead of an unhedged one}. Assuming they planned to return to unhedged at a later date.

Market timing - nah. Someone else a very similar argument on forex a few months ago (at that time the market was pricing in 6 Fed cuts in 2024!) and low and behold the cuts didn't happen and the yen is even weaker.

If you are buying equities, you shoudl be in it for the long term - 10 years plus and forex noise will be drowned out by the defeaning roar of value creation by the companies you invest in.

[Tsumitate Wrestler]

If someone bought 2563 this month instead of 1655 I would think it a reasonable enough bet. {Buying a hedged ETF, instead of an unhedged one}. Assuming they planned to return to unhedged at a later date.

Market timing - nah. Someone else a very similar argument on forex a few months ago (at that time the market was pricing in 6 Fed cuts in 2024!) and low and behold the cuts didn't happen and the yen is even weaker.

If you are buying equities, you shoudl be in it for the long term - 10 years plus and forex noise will be drowned out by the defeaning roar of value creation by the companies you invest in.

I would generally agree with this, however many of us are in a unique position with the New Nisa. We may be making taxable purchases, that will be sold and moved into the New Nisa next year (or the year after etc).

Regardless, the difference will be pretty small either way, and it will not make a large difference.