So, as the US dollar has tumbled the risk of inflation has been rising (the weakening dollar means imports will be relatively more expensive, a lot of the economy is the consumption of imported consumer good - look at Walmart). To counteract this the federal reserve has been slashing interest rates. A year ago the rate was 5.25%, today it's 2% (see). This means my ING Direct savings is only giving me 3% return (see).

I've recently come into a bit of cash that I'm planning on spending on a nice big trip in a year or so. This means I've got US dollars that I want to spend in other currencies, and I don't want it to all disappear. In the past year the US dollar has dropped from 0.74370 EUR to 0.64350 (see). My rough calculations say that that comes to roughly a 16% drop in the value of the dollar, relative to the Euro & if I had money invested at 3% then I'd come out if the year with a 13% loss against the euro.

So, the obvious thing for me to do is to invest my money in a foreign currency which has a stable currency and high interest rates. Because of some obvious bias, I've been looking at Australia. The interest rates there from ING Direct are 7.9% (see). Looking at that same period the US dollar dropped from 1.20110 to 1.04830 (see), a loss of about 15% (ie: the AUD has been only slightly weaker than the Euro). So if I'd had my money in a regular old ING Direct savings account in Australia I'd be up almost 23% over the US dollar, but let's just say 20% over my US ING Direct savings.

So we can see that the US is currently a great place to have debt and a terrible place to have savings. Luckily, in general there's a really high level of personal debt. My question is, how can I best shift some of my savings into a safe, foreign currency? I generally trust the Australian dollar since the economy seems to be being guaranteed by commodities prices (thanks to WA's mining boom). There are US banks like EverBank who offer term deposits (CDs in Americanese) but their 12 month rate is 5.38% vs ING Direct Australia's 8.10%. Does anyone know of better US banks to do safe foreign currency investments, or Australian banks who are easy to deal with internationally? Are there other ways to ensure that my savings grow rather than shrink?