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Investing using Yen

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  • 12-06-2006 11:41am
    #1
    japanpaul
    Closed Accounts Posts: 123 ✭✭


    Hi
    I've been reading about the various investment funds that are around at the moment but I can't find any that let you "cash in" and "cash out" using yen as your currency.
    I am living and working in Ireland now but all my savings (E50000 - E60000) are in a Japanese bank, where I used to live, earning 0.5% interest and doing nothing for me. I've also got a fully topped up SSIA maturing in May 2007.
    I don't want to convert my Japanese money to euro because if the Irish property market doesn't level off in the next few years I will move back to Japan in 2009 - 2010. I have a small euro savings account with Shinsei bank in Japan and was wondering if any european banks offer the same product, particularly investment banks?


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    #2
    Pal
    Closed Accounts Posts: 4,115 ✭✭✭Pal


    In essence, what you are asking for in the first instance of investment fund is two free bets. one on the fx rate and second on the interest rate.

    You can invest in yen and keep the option open to cash out at any time but for this privelige, you would be required to pay a premium.
    this is based on the difference between euro and yen interest rates over the time span of your trade. bankers call it the forward rate and it is calculated on the differential.

    as yen rates are much lower, you would have to pay the cost. this is calculated by the hedging mechanism the bank would need to employ.

    in your case, the bank would sell your yen and replace it with euro. it would also pay insurance ( a call option) to buy back your yen at the price if you wanted to cash out.

    the opposite is the case with borrowers who finance their mortgages in yen. they receive a discount.

    if you do find a 'tailored' package, you can rest assured it is factored into the return.

    on the question of a yen currency account, this is normal. all major banks will offer this service.


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    #3
    antoinolachtnai
    Registered Users Posts: 9,787 ✭✭✭antoinolachtnai


    can you not invest it through a japanese broker? like oki matsumoto's firm, http://www.monex.co.jp/ ?

    Why would you want to repatriate the money? What possible benefit would that give?

    What you want to do is not in principle impossible, just there's little or no demand for it in Europe. Asians love all that currency stuff and holding savings in foreign currencies. There is no appetite for holding Yen in Europe. You can get a yen account, but I don't think the bank 'll be interested in paying interest on it. The facility's meant for trading, not saving.

    You could do this with a currency swap. Of course there will be a premium to be paid for this, what else is new?

    An i-bank is unlikely to be much interested in dealing with that level of savings.

    This isn't the answer to the question you asked, but you have to decide what you want, don't be dictated by your finances. You have enough money there to make a good start in either country. If you want to live in Ireland, cut loose and buy yourself a house here. If you want to live in Japan, just plan for going back.


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