SAVERS with an appetite for risk can triple the returns offered by Hong Kong's banks. But interest rate gains could easily be lost through losses on currency conversions. The territory's banks presently offer about half the rate of inflation - or about 4.25 per cent - and with US interest rates expected to fall, the gap could widen. In Indonesia, for example, the prime rate is currently just over 20 per cent, and banks there pay 14 to 17 per cent on deposit accounts. But Ricor da Silveira, executive director of Lippo Asia, warns: 'The currency devalues periodically against the US dollar by around 4 to 5 per cent a year.' Indonesian rupiah accounts are hard to come by in Hong Kong. The local branch of Bank Negara Indonesia only offers individuals deposit accounts in US and Hong Kong dollars. Lippo Asia manages an Indonesian money market fund which currently yields more than 10 per cent per year. The minimum investment is US$2,000. Deposits in foreign currencies such as Thai baht, or Italian lira can earn interest above 9 per cent. But currencies with high interest rates can weaken significantly, so investors face the risk of devaluation when they convert back to a stronger original currency such as the US dollar. Thai baht deposits are available through Hongkong Bank's Power Vantage and Asset Vantage accounts and Citibank's Currency Manager account. Last Wednesday Citibank quoted a rate of 9.65 per cent on 24-hour notice deposits in the Thai currency. This was higher than the one week rate of 8.25 per cent quoted by Bangkok Bank - where accounts can be opened locally for a minimum of HK$50,000. T. C. Chan, country treasurer for Citibank Hong Kong, warned that there could be potential weaknesses in the Thai baht. He said: 'High yielding currencies are prone to devaluation. That's the trade off.' Mr Chan said that a central bank or government imposing a high interest rate could mean the country has a high inflation rate, large foreign debt, or is experiencing unsupportable growth and needs to cool down by encouraging saving and discouraging borrowing. Although interest rates on Australian and New Zealand dollars have fallen since last year, Mr Chan said that now they were stable and were 'pretty attractive buys'. Rates of nearly 6.5 per cent on Australian dollars and over 6.7 per cent on New Zealand dollars were being quoted by Citibank last week. Mr Chan said: 'If people want to invest for a higher yield they are quite viable. I expect that both currencies will find strong support at their current levels.' Over the longer term, Asian emerging market currencies could appreciate. Emil Nguy, managing director of Income Partners, said: 'Take what happened in the 1980s to the Singapore dollar, Taiwan dollar and Japanese yen. We think that will happen to currencies like the Malaysian ringgit and Indonesian rupiah.' Despite international concern over emerging market currencies following the Mexican peso crisis at the start of 1995, Michael Koh, director of Jardine Fleming Investment Management, pointed out that Asian economies had better fundamentals. Micropal statistics are currently showing that the best returns, in US dollar terms, come from the Spanish peseta, Italian lira, Swedish krona and Australian dollar funds, which have been boosted by high interest rates. Mr Koh, who manages the Jardine Fleming Philippine Trust, believed that the coming Christmas season could have a positive effect on the Philippine peso. 'Overseas contract workers in the Middle East and Hong Kong remit up to about US$5 billion a year. The bulk comes in at Christmas time.' Peso accounts are available through the Philippine National Bank for a minimum deposit of 50,000 pesos (about HK$12,000).