Current Multicurrency Sandwich

by | Feb 12, 2002 | Archives

There are fundamentals that suggest danger in the U.S. dollar. Here is another place to go.

Yesterday's message reviewed seven fundamentals of U.S. dollar weakness and shared some suggestions of alternatives currencies in which to invest.

At our recent International Business Made EZ course in Quito, Thomas Fischer of Jyske Bank outlined a different non U.S. dollar strategy in the multicurrency sandwich.

His suggestions were to borrow one third yen at 1.5%, one third Swiss francs at 3.2% and one third Singapore dollars at 4.05%. The loan should than be invested one fourth in 208 SAS Airline bonds yielding 7.5%, one fourth Polish zloty CDs paying 9.04%, one fourth Icelandic kroner CDS paying 9.09% and one fourth Mexican peso short term bonds paying 9.50%. The total return on this investment (assuming no foreign exchange fluctuation and before fees) would be 30.99% per annum.

To understand this let's look at an example of having an existing SAS 2008 bond yielding 7.5%. this would be used as collateral to secure an additional $40,000 of loans in the three currencies show. Ere is how the investment looks.

Amount       Asset             Yield     Annual Return

$10,0000 Existing SAS Bond 7.50% $750

$10,000 Added SAS Bond 7.50% $750

$10,000 Polish Zloty CD 9.04% $904

$10,000 Icelandic kroner CD 9.09% $909

$10,000 Mexican peso bond 9.50% $950

Total Annual Earnings $4,263

Less Loan costs

$13,333 Yen loan -1.50% $199

$13,333 SFR loan -3.20% $426

$13,333 Spr$ loan -4.05% $539

Total Interest Cost $1,164

Total Return Before Forex and Fees $3,099

Or 30.99% on the $10,000 at risk

You can gain more information on this from Jyskebank by containing Thomas Fischer at or at our upcoming International Business Made EZ in our session on three phase investing.

Until next message, good global investing and business.