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Written by tolumi
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Friday, 05 December 2008 15:00 |
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Offshore Interest Rates The deposit-takers have been fairly successful in consolidating their position this year despite fluctuating interest rates. But how will they fare into the millennium and beyond? The general view is that interest rates will continue to rise as they have in the last quarter of 1999, but only for a matter of six months or so. Any peak in rates above 6.75 per cent will be a shock for most people. In the long term, however, this rise is likely to reverse and tend towards the European interest rate level of around 3 per cent. Offshore Interest Rates & Chris Bradshaw Chris Bradshaw at Bristol & West comments: “The money markets have been very inconsistent recently and it’s difficult to plan too far ahead. The feeling is that this will even out by the middle of 2000. The expectation is that rates will rise dramatically in the next few months, but any sustainability is just wishful thinking. Most people are still reeling from the huge fall in rates at the close of 1998, but any rises we do see are unlikely to make up for this.” As far as deposit-takers are concerned, this will mean even more focus on the equity-linked products which have been viewed with some interest in European markets. It may also mean a movement into investment funds as many customers begin to feel the pinch on their deposits. Anyone looking for an income from their savings would be wise to consider one of these alternatives. Offshore Interest Rates & David Siddall David Siddall at Abbey National Treasury International anticipates the influence of an even broader range of investment options in the market next year. He says: “Even in a falling interest rate environment this year people managed to grow their businesses through diversification into structured products and euro products amongst others. Next year will be no exception. We already offer a selection of investment funds but we can expect more packaging of these types of services next year.” Into 2000, Siddall believes that investment across several currencies will be an important aspect to the market. He adds: “The rates in the three major currencies are likely to stay the same until the beginning of 2000. After this, it is difficult to say - in 1998 no-one would have predicted that the euro and dollar rates would be so close. Having said that, the huge amounts of cash in the market over the millennium will cause an artificial, but nominal, rate increase.” This is likely to ease back over the year, he says, but in the longer term it is generally agreed that the three currency rates will slowly begin to converge. 
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Last Updated on Tuesday, 06 January 2009 13:19 |
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