No. of Recommendations: 2
Thanks to all the uproar lately diversification becomes more and more important for me. While I am diversified re brokers/banks over several countries/jurisdictions 80% of my assets are held in USD, with only 10% each in EUR/NZD each. With less trust now in a longterm strong USD I am thinking about more currency diversification for which it might be a perfect time as against the USD all else currently are extremely weak. Mostly living in Germany I naturally should think "Euro", but I don't, because of geopolitical unrest and potential for more to come (read: Putin). There are 2 decisive factors re the decision what currencies to buy for my liquid USD:
A) Looking at exchange rates I am very tempted by NZD + AUD + JPY, as all 3 are historically low against the USD, especially the 3 last ones = perfect time to sell USD and to buy those currencies.
B) Interest rates: How much % do I get in which currency? I simply looked at IBKR, as I have an account with them, so could easily exchange my USD cash I have with them into NZD/AUD/JPY. Result: JPY with 0% at IBKR is not interesting any more. Similar for NZD with 1.3% and EUR with 2%, especially because I already have 10% in each and get far more for that.
That leaves AUD with 4% at IBKR, which hugely surprised me as NZD and AUD longterm move more or less in tandem, usually with the NZD a bit weaker, but offering higher interest rates. I am therefore completely baffled by IBKR offering 4% for holding AUD but only 1.3% for NZD (btw IN New Zealand I get 4% for NZD term deposit).
So it seems to be a non-brainer: Converting my USD cash at IBKR in AUD, thereby getting great interest + currently many weak Aussi Dollars + having diversified into an additional currency.
What may I miss here?
