Martin Lee @ Sg
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Low Cost Foreign Exchange

Here’s a nice tip if you ever need any sizeable amount of foreign currency for investment purposes or funding your children’s education.

Instead of changing it at the banks where you pay quite a huge spread, Phillip Futures has a currency exchange function where you can change it at very tight spreads.

For example, if the SG/AUD is trading at 1.29/1.305 in the banks (a spread of 150-200pips). Philips might be quoting you a rate 1.2955/1.2995 (40 pips). The exchange is transacted at live rates and can be done anytime you want, so it is pretty convenient.

Low cost foreign exchangeFuthermore, Phillips only charges a flat fee of US$30 for any telegraphic transfer.

One example of application is for funding your foreign currency fixed deposits. You can use Phillips to change the currency you want, before transfering it to your bank account. As long as the forex savings is more than US$30, it is worthwhile.

I’ve done some calculations and found that if you are changing anything in excess of S$10,000, it will probably be worthwhile to go through the hassle of opening a futures account at Phillips Futures. They do not require you to maintain a minimum balance in the account, so you can use it purely for foreign exchange as and when you need it.

Edited: Please check with your bank whether they charge you any fee if you were to fund your account with your own foreign currency. 

For higher amounts, the savings can be significant.

For transfers to 3rd parties (eg university, offshore investments), you might need to provide some documentary proof that the transaction is legit before they allow your transfer to go through.

Please note that the currency exchange function is different from their forex trading utility. The former is mainly for clients to change currency at competitive rates without any form of leverage, while the latter is more for speculative trading. Unless you are an experienced trader, you are advised to avoid the other products inside the Phillips Futures account.

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Joe says 14 years ago

I think what Rhin meant is for transferring to a foreign currency FD account. If we use foreign currency current account, there will be no charge. I have done this transferring from my current account (USD) to DBS Vickers USD account. Current account usually comes with checking book facility, so just use the cheque to transfer to to other Singapore US account.

    lioninvestor says 14 years ago

    Hi Joe,

    Yes, in your case, there should be no additional charges.

    In Rhin’s case, it was more to use Phillips low exchange spread to change currency, and deposit it into the bank’s FD. Apparently, the bank charges you for that.

lioninvestor says 15 years ago

Hi Rhin,

Thanks for the inputs.

I’m aware that banks do charge a foreign currency exchange fee if you try to do a outward telegraphic transfer without changing the foreign currency through them.

It works something like:

If debiting from customer’s foreign currency account – 1/8% of the S$ equivalent of remittance amount, subject to minimum S$10 and maximum S$100

If payment using same foreign currency cash – 1.5% (for USD, GBP, EUR, JPY, CHF), 2.5% (for AUD), 3.0% (HKD), 5.0% (all other currencies except THB and IDR)

However, if you do an inward telegraphic transfer to your own foreign currency account, how can they be charging you for that?

It’s like if you have an account with them and someone tries to transfer money to you. An incoming fee of 3% is quite ridiculous.

POSB charges a handling fee of S$10 for inward transfers.

Rhin says 15 years ago

This is a useful tip indeed. However, when I tried it out at OCBC, they actually charges a 3% fee if one is transferring foreign currency to their foreign currency FD account, instead of buying the currency through them. I suppose this is to discourage people from using this tip, resulting in a loss of revenue for them.

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