I don't think so. The Iceland Central Bank rate is 13.75. It's most likely that you get a good rate of return because their rates are high. If you look at the New Zealand CD they offer, it's at NZ's bank rate. It's not speculative. But if the dollar did appreciate, you'd obviously lose some. But as I say, I'm hedged for that scenario.
Then why is this stated on their webpage: "Returns based on a fixed interest rate and potential appreciation in the selected foreign currency versus the U.S. dollar. However, if the selected currency loses value versus the U.S. dollar, you could experience a loss of principal. " What part of the rate factors in "appreciation"? It would seem to me that if the flat rate was 13%, then no appreciation would be neccessary on the currency to account for the stated "rate". So, in other words, no appreciation should = 13%, but they explicitly say that rates are dependent on both fixed rates and appreciation? So what is the point of mentioning appreciaton? It would seem that they would only have to mention the possibility of principal loss due to depreciation since appreciation should play no role in determining the rate if it is fixed.
there is a link on right side of webpage with all info. the rate is fixed, however-they have to convert yours let say $10K to ISK on day, when you purchase cd(looks like they ask within 1% for it). and then-convert it back at the end of the deal. Whatever exchange rate will be on that date-it's all yours. fair deal, but...12 APY/4=3%, you lose 1% after conversion, 2% left- taxes...aghh...plus risks. ISK is looks like least volatile for last 12 months, but still plenty of possibilities. rest of those deals-i wonât even touch them..TD ameritrade deal is way to go
Don't! It is a very thinly traded and volatile currency. You won't know the exact exchange rate you'll be getting when you buy and sell the CDs. The volatilty could easily eat up most of the 13% you've earned, and then some. Just look at the intraday ISK-USD charts.