Bank of China invites Scots to speculate on currency

THE Chinese are coming - for your money. The Bank of China has launched a savings account aimed at enticing Scots to invest money in their powerhouse economy.

The account is called the RMB Fixed-term savings account, and with a minimum deposit made in the Chinese currency of renminbis of RMB20,000 - or 1,873 - investment specialists claim it is aimed directly at individual customers.

Although the Bank of China account offers an annual interest rate of 2.38 per cent, the value of the holding - because it is held in renminbis - could soar if the currency value escalates rapidly.

The renminbi last month hit a record high, and some foreign exchange traders think the currency will appreciate by 5-6 per cent this year.

Sources at the Bank of China, which has opened a branch in Glasgow, say the account is a good opportunity for punters who want to take George Soros-style advantage of an expected rise in the value of China's official currency relative to sterling. Experts say that until recently opening this sort of account was "nearly impossible", but investors who have heard that China's economy is growing are starting to take an interest. The Chinese are believed to want to increase their holdings in sterling to help finance economic expansion.

Not everyone is rushing in, however. Investment advisers have warned punters against what is still a big gamble.

Alan Dick, of FortyTwo Financial Planning, said: "If it goes up, great, but if it goes down, you are screwed. It is packaged in quite an interesting and unique way but the bottom line is it is not an investment, it is a currency speculation. It's a gamble. I don't think that is for the man in the street."

Ken Taylor, owner of Mackenzie Taylor Wealth Management, agrees. "Instinctively, my view is it is a recipe for disaster. It is like when you buy a Japanese equity fund or a European equity fund. As soon as you buy outside the UK you are subject to foreign currency risk. It can boost your returns but it can also wipe out your returns."

Neither adviser expects that the Bank, one of four state-owned banks in the country, will have too many savers beating down its doors at the branch on Sauchiehall Street.

Dick said: "I don't think there is going to be a queue. But I'm sure there will be some people who like the idea."