I received several question from readers asking opinions on foreign currency account (FCA). Some people look at it as if it is a very safe and high yield investment because some foreign currency denominated account gives more than 7% interest per annum.

In order to post a thorough research for you, I fired some emails to most of the banks in Malaysia. Guess what? Only Citibank’s Ms. Amie Heryanie from Internet Service Support replied my email enquiry within 2 working days. At the point of writing this post, the other banks still haven’t responded yet. If after reading this report, and you had made up your mind to open a FCA, please consider Citibank as your first choice.

What is a foreign currency account? How it works?

Foreign currency account is an account maintained in a bank in another currency than the currency of the country in which the bank is located. In Malaysia, FCA is an account denominated in currencies other than Malaysia Ringgit. Banks which are designed by Bank Negara Malaysia to open foreign currency accounts are called “Designated Banks”.

Denominations offered :

USD (840) = US Dollars
GBP (826) = Pound Sterling
AUD (036) = Australian Dollars
SGD (702) = Singapore Dollars
EUR (978) = European EURO
JPY (392) = Japanese Yen
CAD (124) = Canadian Dollar
CHF (756) = Swiss Chronos (Francs)
NZD (554) = New Zealand Dollars
HKD (344) = Hong Kong Dollars
THB (764) = Thai Bhat

Photo by bradipo

Purposes of opening a FCA

Nowadays, banks promote foreign currency account investment heavily. What is the main purpose for a person to put his money into a foreign currency account?

1. Hedge against exchange rate fluctuations
Foreign currency accounts can be a good option for importers and exporters. If you open an account in the currency in which you make the bulk of your transactions you can hedge against exchange rate changes by keeping money in the account until the rate is beneficial to you.

2. An alternative form of investment with potentially higher interest rates
For example, a fixed deposit FCA denominated in New Zealand Dollars gives 8.2% interest rate per annum for the period of 12 months, as offered by United Overseas Bank.

3. For future child education funding
If you plan to send your child to study in Australia, saving your child’s education fund in an Australian Dollars denominated FCA will save you the worries of Australian Dollars appreciation.

4. For non-resident employed in Malaysia to retain foreign currency salary received from overseas.

5. Transactions are less costly and save a significant amount of money lost through the exchange conversion process to :

  • Individuals with children studying overseas
  • Individuals who are employed overseas or have regular income from abroad
  • Repatriation of funds from individual FCAs offshore send back to FCAs onshore

Risk Involved in FCA

Because of the risk-return trade-off, higher potential returns are associated with higher risk. Foreign exchange markets can be volatile. Currency positions held in these markets may involve actual losses. What’s the risk involved with a foreign currency account?

1. Market Disruptions
From time to time, significant events can occur that disrupt the normal operations of financial markets. Such events may reduce the liquidity of a currency or of the foreign exchange markets generally. Examples:

  • failure of a major institution
  • war
  • a major political event
  • failure of a government to meet its financial obligations (sovereign risk)

If, as consequence, there is a movement in the exchange rates, such events could result in a financial loss to holders of foreign currencies.

2. Market Risk
Market risk is the risk that prices including exchange rates and foreign currency interest rates will move adversely. There is a risk that exchange rates and foreign currency interest rates will change, possibly suddenly and substantially, causing you to incur a significant actual loss as a result of your investment

3. Currency Risk
Currency risk is the risk that because of adverse exchange rate movements the value in Ringgit of your FCA may fall. Should you hold an offsetting position in the foreign exchange markets or in a commitment to spend this currency then your loss maybe offset in part or in full by the offsetting position.

4. Interest Rate Risk
The foreign currency interest rate that you receive on your FCA is determined by the Bank by reference to a variable foreign currency interest rate in the currency of your holdings. Consequently, you may experience a reduction in your interest income should interest rates for that foreign currency fall.

There is no interest rate risk if you are investing using Time Deposit Account with fixed tenure.

5. Credit Risk

Credit risk is common to all investment products that you may hold with the banks. In all cases, you are reliant on the ability of the bank to meet its obligations to you under terms of the particular product.

Please take note that interest earned is subject to 5% withholding tax.

Type of Accounts

1. Time Deposit Account
With foreign currency Time Deposit Account, you can deposit your foreign currencies for a period of ranging from 1 to 12 months and enjoy high interest rates. Standard Chartered Bank Malaysia provides tenures as short as 1 week.

  • Similar to Fixed Deposit
  • Tenure ranging from 1 week to 12 months
  • Minimum initial term deposit requirement
  • Interest paid upon maturity

2. Call Deposit Account
Call deposit account have features like a Checking Account but without interest earned.
Some banks provide interest rates return. For example, UOB’s Foreign Currency Call Account let you earn as high as 6.2% p.a. denominated in New Zealand Dollars.

  • Minimum initial call deposit requirement
  • Interest rate calculated daily and credited monthly
  • No minimum withdrawal amount required

3. Multi-Currency Account
This type of account is a special product offered by RHB. RHB Multi-Currency Account is an interest-bearing account that offers customer the opportunity to hold up to 13 foreign currencies in one account. For a multi-currency account, it is also divided into two groups – the call deposit and time deposit.

Requirement to Open a FCA Account

The criteria to open the said account is as below:

  • Minimum age of 18 or 21 years old (depends on bank’s policy)
  • Copy of IC (Malaysian)
  • Passport & work permit with validity not less than 24 months (if foreigner)
  • Secondary Documents  (proof of employment/education)
  • Minimum deposit of USD1,000-10k or equivalent, depends on banks

Note: FCA are offered to individual account holders only.

Standard Terms and Conditions

  • Residents without domestic credit facilities are free to open foreign currency accounts with no caps on limit.
  • Residents with domestic credit facilities are capped to USD150,000.00
  • for foreign currency accounts (FCAs) opened solely to facilitate education and employment overseas; and convert Ringgit for credit into foreign currency accounts (FCAs) up to RM100,000.00 per annum, for purposes other than education or overseas employment.
  • With all of the above, all account openings are subjected to bank branch manager’s approval and must be within the guidelines of the Exchange Control of Malaysia (ECM).

Definition of Domestic Facilities
Resident obtaining any Ringgit advance, loan, trade financing, hire purchase, factoring, leasing facilities, redeemable preference shares or similar facility in whatever name or form, other than-

  • One personal housing loan & one vehicle loan (hire Purchase) obtained from residents
  • Credit card & charge card facilities
  • Trade credit terms extended by a supplier for all types of goods & services
  • Forward exchange contracts entered with authorized dealers
  • Inter-company borrowing within a corporate group

The following are also considered domestic borrowings:

  • 1 housing loan, 1 Overdraft, no car loan
  • 2 car loans, no housing loan
  • 1 housing loan, 1 Overdraft and 1 car loan
  • No housing loan, 2 Overdraft, no car loan
  • 2 Housing Loans, no car loan

Malaysian with NO Domestic Facilities :

  • Totally no loans of any kind
  • Only 1 Housing Loan & 1 Car Loan
  • Only has credit Cards

Individuals with more than one credit card or charge card are NOT considered as domestic borrowing

Charges Involved

Charges vary depends on bank and the type of service. Below is the charges involved in a Call Deposit accounts at Citibank.

1. Service Charge
– RM25 is imposed when average monthly  balance is less than USD5,000 or equivalent.

2. FAF Charges

Note: *FAF rate : (Buying OD + Selling OD/TT)x ½

FAF charge of 1.5% will be levied on any deposits and withdrawal of any FCY cash


FAF charge paid in FCY cash : 1.5% x FCY = FCY
FAF charge paid in Ringgit : 1.5% x FCY x *FAF rate = RM  XXXX.XX

By FCY cash : 1.5%
By DD/TC : No FAF charges (if same currency)
By incoming TT : No FAF charges (if same currency)
From FCY Call Account transfers : No FAF charges (if same currency)

By FCY cash : 1.5%
By DD/TC : No FAF charges (if same currency)
By outgoing TT : No FAF charges (if same currency)
To FCY Call Account transfers : No FAF charges (if same currency)

Links to Banks

Citibank | Foreign Currency Time Deposit
United Overseas Bank – Personal Banking – Deposits – Foreign Currency Account
RHB BANK – Multi-Currency Account
Maybank – Individual Foreign Currency Account
CIMB – Foreign Currency Current Account
Standard Chartered : Foreign Currency Account
EON Bank Group Malaysia: Treasury & Investment Banking – Foreign Currency Accounts
Hong Leong Bank – Foreign Currency Fixed Deposit
Combinations Account – HSBC Bank Malaysia Berhad | HSBC Malaysia

Should you invest in FCA?

If you want to know my opinion on investing in foreign currency account, my answer is,”No, I am not interested at this moment.”
FCA is suitable for those who have specific purposes such as the frequent export import businesses, parents with child studying overseas, or expatriates working in Malaysia.

I personally regard a FCA like a liquid cash account. Most of the time I am in Malaysia and I spend using Ringgit Malaysia. When I shop online, I use PayPal if possible. Most of my money is invested, in investment-linked funds, in unit trusts, local shares market and properties.

If you have a lot of cash (a few hundred thousands), FCA might be a good investment vehicle for you to diversify your portfolio and lower the Ringgit fluctuation risk.


Personal finance author and trainer

    33 replies to "Should You Invest in Foreign Currency Accounts?"

    • Darwin

      Hello there, what about if im earning in USD and my salary is being directly credited to my bank account and im losing out a substantial amount on the conversion? thought of opening like a USD account n transfer as n when needed to a local account. yet i think the amount on the service charges would be similar the the loss in the conversion rate right?

      • KCLau

        The best is to ask your employer for alternative to get paid.

    • Ross

      hello there .
      i have recently moved to Malaysia.
      I have to separate accounts, one in the uk and one in Australia .I would like to transfer all my money from both accounts into an account in Malaysia as i plan to invest a large sum of money in a project here in kuala lumpur . In your opinion would i be best transferring it into a Malaysian ringgit account and suffering the exchange fees and the current bad exchange rates or transferring it all into foreign company account and waiting for the ringgit to weaken .
      I would really appreciate your input on the matter.

    • John

      KCL..can I deposit MYR into a FCA hold it in AUD at the rate (given time at deposit)

      • KCLau

        Not sure.. you better ask the servicing banks.

    • Park sung woo

      I have mm2h visa from malaysia and USD and RM account in hsbc.
      I transferred from Korea to Malaysia about 4500000usd already.
      And I am going to transfer some more money.

      I have a 2 question
      1.can I transfer my money to my own account in canada without restriction? I wish to invest canada bond and fund.
      2.if I want to buy condominium for my son(canada citizen and live in toronto canada),under my son’s name, in toronto, can I transfer money to canada?……q kind of bestow

      Thx u.
      Please give me a answer.

    • SK Toh

      Hi KC, great article,. what is your advise for someone who is saving for her children education in the UK?

    • Mab

      Hi KC thanks for this share. I am currently working in Taiwan and planning to invest in foreign currency. Do you think is the best for me to open a Foreign Currency Account and farm my USD in it? If i plan to return to Malaysia, can i withdraw the money in USD?


    • Happy

      hi KC, can i withdraw USD from paypal to Malaysia bank FCA? if yes, when i withdraw from FCA, it must be converted to ringgit? or i can actually withdraw USD?


      • KCLau

        My experience: When I withdraw USD to Malaysia account, it will automatically be converted to RM before the transfer. I am not sure if you can withdraw USD to an FCA account here. Check with PayPal.

    • norlishafikah binti mohd ali

      hye… thank you for the post.
      could you a short review on FCA in Public Bank
      because i didnt see public bank in your recommendation to open FCA

    • liz aziz


      would like to know which one is more give benefit between foreign current account and fixed deposit.

    • Anna

      Hi KC, I am frequent reader of your articles and find them very informative and helpful. You fill in the gap of information that we desperately need but can’t really find.

      I was wondering about what is your opinion on investment in gold? ie like the one’s offered at Maybank?

    • […] Should You Invest in Foreign Currency Accounts? […]

    • Saviour-V

      On the subject of online payment processors, and partially related to this topic, is it possible to have an offshore bank account, linked to PayPal (or AlertPay, if you have this), and do you know of any possible places to get one set up?

      In my case, both my AlertPay and PayPal accounts are linked to local accounts here in Malaysia, but AlertPay changed their rules, and now it’s impossible for me to deposit or withdraw funds from them into a local bank account.

      Do you have any possible alternatives to this situation? Please let me know. Thanks!

      • KCLau

        @ Savior-V

        I don’t use Alertpay though.
        Paypal works fine. I can withdraw to my US bank account and also Malaysia one.

        • Saviour-V

          OK, so that answers the hook-up with foreign bank accounts question…but my real question is whether it’s easy to get a foreign bank account set up without having to leave Malaysia at all. Out of curiosity, how did you get your US bank account set up, anyway, Mr. KC Lau?

    • janice

      hi KC,
      While i was still undecide whether to invest in FCA or not, however after reading your good written article on FCA. Now, i am very sure and decided to forgo the FCA investment for the moment & focus on the property investment first. TQVM

    • JEREMY

      Forex trading is one of the high risk investment in the world. Interest rate will be release monthly for the major. If you put in more than one month then make sure the fundamental of the country is at up trend, see what the economic reports (like GDP, employment data, CPI, etc.), Even Malaysia’s economy reports need to take note also, because eventually you will exchange back to ringgit.

      Current center bank rate: AUD 4.5%, NZD 3%, CAD 1%, EUR 1%, GBP 0.5%, CHF 0.25%, USD 0.25%, JPY 0.10%

      Normally the higher the center bank rate the stronger the currency.

      • cecew

        Thanks KC & Jeremy for the useful info.

    • Jess

      The article was just nice for me as a reference.
      Recently because of i gt some excess money, so, i think of open a foreign currency account solely as my permanent saving (considering GBP) and not for business or investment purpose. But after read your article it seems like not really work out as wat i think. Do you think it’s possible that doing saving in this way rather than i put in FD?

    • Chong Siaw Ching

      Hi KC,

      I have just open a FCA account with Maybank and also put a Placement of USD10000 (12 month) in that account on the rate of RM3.402/Dollar. As of today (15/01/10) I saw the selling rate of 3.372 TT/OD. So, am I having a loss now?

    • […] FCFD is another tool for you to diversify your investment portfolio. The risk of FCFD is much higher compared to fixed deposit hence the return is also higher if everything goes smoothly. […]

    • Sandra

      Intresting information for the expats here.
      Thanks for sharing

      a href=http://www.mrxpat.com rel=nofollowasian expat/A.

    • […] Should You Invest in Foreign Currency Accounts?If you plan to send your child to study in Australia, saving your child s education fund in an Australian Dollars denominated FCA will save you the worries of Australian Dollars appreciation. 4. For non-resident employed in Malaysia to … Share and Enjoy:These icons link to social bookmarking sites where readers can share and discover new web pages. […]

    • ck

      Thanks for your sharing…

      Some extra info:a fixed deposit FCA denominated in New Zealand Dollars gives 9.1% interest rate per annum for the period of 1 month, as offered by OCBC Bank.

      Clocing date: 30th June 08

      • KCLau

        @ CK

        Thanks for the info 🙂

    • Daisy D.

      Thanks so much for your very thorough article which answered all my questions and doubts. It’s so refreshing to find all required info on one page, which is hard to find especially pertaining to Malaysia. And you saved me many hours of research too.

      I was thinking of getting a FCA for future graduate study overseas but thanks to your help I know it’s not the best option at the moment.

      Keep up the excellent work! Can’t thank you enough.

    • louise

      Thanks for the information. It’s great. I’m still not sure whether I want to do this. I am working in China, there is a certain amount of money that I need to transfer home every month but I do have some savings in China. As you know, all Chinese yuan need to be converted before getting out of China except for RMB 20,000 cash which everyone is allowed to bring out of China when travel out. To actually gain something from FCA, I would have to pay attention to exchange rates in order to gain currency difference, yes? Would you kindly share your advice to people like me?

      • KCLau

        I don’t know much about FCA in China. My article is about FCA set up in Malaysian banks.

    • ChampDog

      I agree. I think FCA is not for me either at the moment. I do not have enough cash to play this game also. Good article and thanks for the sharing.

      • KCLau

        Thanks ChampDog, you are my frequent reader.
        I am really glad that my article provides relevant information to you.

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