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Published on March 20, 2008

On Tuesday, the US Federal Reserve cut its Fed Fund rate 75 basis points to 2.25 per cent, and it is widely expected to make further cuts, bringing the rate down to 1 per cent by the end of the year.

The Bank of Thailand recently said it would focus on inflation pressure rather than the gap between the Fed Fund rate and its one-day repurchase policy rate of 3.25 per cent. Nevertheless, the central bank is expected to cut its policy rate as much as 2 per cent later this year.

Many banks offer deposit packages covering less than one year, for those who are looking for short-term deposit arrangements.

Siam City Bank is offering a five-month deposit package with 2.65-per-cent interest per annum, payable monthly. It is available only until April 11, and the minimum deposit is Bt10,000. The bank will transfer interest directly into a depositor's savings account. At the end of the fifth month, if the depositor has not instructed the bank to do anything else, it will automatically shift the deposit into a three-month account.

Tisco Bank is offering a Super Savings package with 2.4-per-cent interest per annum. Savers using the bank's special saving accounts must have a minimum deposit of Bt100,000. They can withdraw from the account only twice a month.

Earlier, Krung Thai Bank introduced a savings account called KTB Birthday, offering 3.25-per-cent interest with maturity of only 42 days. The minimum deposit is Bt10,000, and the offer is valid only until next Tuesday.

Standard Chartered Bank recently introduced a deposit package involving two savings accounts. Savers must put money into both. The key savings account offers only 0.75-per-cent interest on minimum deposits of Bt30,000, while the supplementary account offers 2.5-per-cent interest.

Aside from bank deposits, bills of exchange are another short-term investment tool. Although there has been some bad news about companies defaulting on repayment of bills of exchange, savers can be confident if the issuer is one of the large banks.

Bank of Ayudhya, the country's sixth-largest bank, has issued three- and nine-month bills of exchange offering interest rates of 2.75-3.25 per cent per annum. The bills are available until March 28 and are not transferable.

The interest earned by the three-month bills of exchange depends on the level of investment. Those who invest Bt500,000 to Bt10 million will receive 2.75 per cent; from Bt10 million to Bt100 million, 2.8 per cent; and more than Bt100 million, 3 per cent. The nine-month bills offer 3-per-cent interest on investments of Bt500,000 to Bt10 million and 3.25 per cent on investments greater than Bt10 million.

For savers wishing to lock up their money for a longer period, their choices include three-year debentures from Krungthai Card (KTC).

KTC's Bt4-billion debenture issue will be offered to institutional and retail investors through Krung Thai Bank, Bank of Ayudhya and Standard Chartered (Thai) Bank next Monday and Tuesday.

The debentures have a par value of Bt1,000 per unit and are offered in minimum lots worth Bt100,000, with increments of Bt100,000.

Tris Rating has given the debenture issue an "A-" rating.

"Our debentures are effectively a savings alternative for the people. The debentures are without collateral and with a holder's representative. They are due in three years with interest paid every six months, on March 26th and September 26th, at a rate of 4.1 per cent per year. The principal will be repaid at the time of redemption," said president and CEO Niwatt Chittalarn.

Jiwamol Kanoksilp

The Nation