Why would an organization consider investing in short-term funds overseas?
Moving funds between countries is something investors do to get a better rate of return or to play the differences in exchange rates. Organizations moving funds overseas have additional reasons for doing so.Exchange RateThe primary reason to move money between countries is to play the differences in exchange rates between currencies. By buying a currency when it’s cheap and selling it when it’s appreciated in value, a tidy and regular profit can be made.Local LiquidityOrganizations, rather than investors, may put short-term funds into overseas banks and funds to have a supply of ready cash denominated in the local currency. This is useful for purchasing local goods or paying business expenses.Governmental RequirementsSome governments require that a certain percentage of foreign investing in their country be done in the local currency and put in incentives to do short-term investing there.Interest Rate DifferencesSometimes, buying bonds or CDs in another country will result in a higher
