Rates on offer in US dollar and euro offshore savings accounts have risen significantly compared wit...
Rates on offer in US dollar and euro offshore savings accounts have risen significantly compared with base rates in the past three years, according to Investec Bank (Channel Islands).
According to analysis of data from the bank's US dollar and euro offshore savings indices, the average rate for US dollar savings accounts on 20 July 2005 was 1.84% - almost 140 basis points below the US Fed rate at the time. However, the average rate stood at 2.2% on 31 July, 20bps above the Fed rate.
Investec believes the rise is due to increased competition in the US dollar offshore savings market.
The research found the euro offshore savings market also saw an increase in competitiveness in terms of interest rates.
On 20 July 2005, the average rate for euro offshore savings accounts was 1.18%, approximately 82 basis points below the European Central Bank (ECB) rate at the time. However, three years later on 31 July 2008, the margin between the two had decreased to 32bps with an average interest of 3.93%, compared with an ECB rate of 4.25%.
Laura Preston at Investec Guernsey said the findings represent good news for savers with US dollar or euro offshore savings accounts.
"However, we would still urge savers to shop around and ensure that they consider the consistency of the rate they are being offered rather than necessarily opting for short-term headline rates that may not last.
"Our latest indices revealed that there are still great discrepancies in the interest rates available. For example, a fifth of US dollar offshore savings accounts were paying a miserly interest rate of less than 1% as of 29 August 2008," she added.
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