Dual Currency Investment | Range Bonus Deposit | Dual Currency Investment Grid
What is a Dual Currency Investment?
A dual currency investment (DCI) is a short-term, fixed rate money market deposit that offers higher returns than are available on plain vanilla deposits in exchange for investors accepting the risk that the principal might be repaid in a different currency. Deposit amounts can be as low as USD75,000 or equivalent. DCI is an ideal gateway for investors to diversify their portfolios into foreign exchange.
How does a DCI work?
The client deposits money in one currency (base currency) for a set period with the concluding outcome being either the original deposit and yield being repaid in the base currency or the alternative currency depending on where spot is settled at expiry.
The client looks at various currency options and decides to deposit EUR 1 million for 1 month for an increased yield of 10% with a
conversion rate of 1.6129.
Scenario 1 - At expiration (2 business
days before deposit maturity) - If the spot
rate is below the conversion level of
1.6129, the client is repaid 100% of their
original deposit plus a 10% p.a. yield.
Scenario 2 - At expiration (2 business
days before deposit maturity), if the spot
rate is above or equal to the conversion
level of 1.6129, the client is repaid 100%
of their original deposit plus a 10% p.a.
yield converted at 1.6129 into USD.
The client can decide to either keep the USD amount on deposit or enter into a new structured deposit product to enhance their yield on a USD deposit or get converted back into their original base currency which is EUR.
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