CASH has been king for Hong Kong residents seeking shelter from the recent turbulence in domestic and regional stock markets. According to the most recent statistics from the Hong Kong Money Authority (HKMA), deposits have been rising by nearly three per cent, despite interest payments being little more than half the rate of inflation. A survey of rates being offered by the leading banks shows the best investors can hope for over 12 months is an interest rate of 6.1 per cent. Inflation, meanwhile, gallops along at about nine per cent per annum. Time deposits not only entail a loss of purchasing power, they also carry the inflexibility of locking money away. Osbert Lam, publications manager for the HKMA, said the main reason time deposits had grown was that investors were shifting from savings deposits to term deposits in search of higher rates. The figures were also boosted by the credit of interest earned by depositors. Increased volatility in alternative investments such as the stockmarket was also adding to the popularity of fixed deposits. Despite the fact time deposits were deregulated last year, there remains little variation between the different banks' time deposit interest rates. Rates for $50,000 invested in a six-month deposit vary between 5.125 per cent and 5.625 per cent. A far more profitable option for investors wanting to retain money in cash might be to invest in offshore term deposits. Interest rates of more than eight per cent can readily be found. However, these require large principals or long terms. Halifax offers an interest rate of 8.6 per cent for five years for amounts of GBP50,000 (about HK$615,000) or more. For two years, Halifax offers a rate of eight per cent. Birmingham offers 8.5 per cent for three years on amounts of GBP5,000. For those seeking US dollar accounts, Tyndall offers a rate of 5.125 per cent for a term of six months on a principal of US$50,000. Another way of keeping cash is by subscribing to a currency fund. The prospective yields on currency funds make them far more attractive than fixed-term deposits. Rothschild's Five Arrows Italian Lire fund, for instance, at present yields 9.53 per cent. The big danger with currency funds is that the exchange rate may turn against the investor and wipe out the yield. According to Virginia Dutkin, marketing manager for Fidelity Investments, currency funds are becoming more popular as investors learn more about them. She said they were being used relatively heavily at the moment by investors taking a breather from the equity market. Fidelity operates 23 currency funds, held in a range of term deposits. The US currency funds, for example, comprise time deposits in 20 different US banks. Ms Dutkin said investors considering currency funds should seek to hold money in a currency they would ultimately use in order to minimise exchange rate fluctuations and possible losses.