Cash Is King? -------
Cash-rich Singaporeans averse to risky alternatives are in an unhappy spot of having their savings eroded by inflation. Not only is inflation clearly on the rise - it hit a 26-year high of 6.6 per cent in January - banks are further cutting their already miserable deposit rates. Last week, DBS Bank slashed its fixed deposit (FD) rate again to 0.9 per cent for a 12-month deposit of $1 million. The latest revision is less than half of the 2.02 per cent it offered on Jan 2.OCBC Bank's 12-month FD rate has been lowered to 1.2 per cent from 1.4-1.8 per cent last year. This is for amounts between $500,000 and $1 million.
Interestingly, bankers said that generally, people with excess cash don't seem to be using it to pay down loans such as mortgages. Some of the more gung ho are venturing into foreign currency products. Stanchart said that since August last year, the bank has sold more than $400 million of deposit-type products, principal protected and capital guaranteed. Dual Currency product, sales have grown three to five times since September last year, he said.
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