Before you park your cash in a forex account, you need to consider several points, says OCBC Bank forex strategist Emmanuel Ng.

First, because the Singdollar is appreciating, you might find it fairly attractive to invest in high-yielding currencies such as the New Zealand dollar.

However, there is a consensus that the greenback will strengthen over the next three to six months, so there is a possibility that the same high-yielding currencies will depreciate against it - and hence against the Singdollar.

Remember, the current investment environment is one of heightened volatility.

Therefore, you have to be fairly nimble if you invest in high-yielding currencies. You must have the option to exit as and when you want or need to.

Euro: Interest rate = 3.76%

The euro's movements against the Singdollar will continue to reflect sentiment over the past few months. In essence, they are the reverse of those for the greenback.

If the general outlook for the greenback remains negative, the euro is still the beneficiary. Plus, the European Central Bank is not expected to cut interest rates soon.

Pound sterling: Interest rate = 4.56%

A favourite high-yield currency, the sterling has also been one of the top reserve currencies of choice for central bankers worldwide, after the greenback and the euro.

However, there is a general estimation that the British economy is slowing. Against that backdrop, the sterling becomes a less secure investment.

New Zealand dollar: Interest rate = 7.75%

The Kiwi dollar is driven by a yield advantage because the interest rate difference between it and the Singdollar is significant.

The New Zealand dollar is also viewed as being fairly resilient.

Australian dollar: Interest rate = 6.74%

The Aussie dollar is a fairly safe bet. However, if the greenback stages a recovery, you would essentially see the selling of this currency, which would devaluate it.

Note: Rates are valid for a minimum investment of 5,000 units of the currency in a one-month deposit with OCBC.

This article was first published in The Straits Times on May 4, 2008