Dual Currency Deposit

• Start by choosing a deposit currency (USD, GBP, EUR,AUD,CAD,JPY,CHF & NZD) and pair it with another currency, i.e., linked currency (USD, GBP, EUR, AUD, CAD, JPY, CHF & NZD) based on your views and needs.
• Choose a deposit period, from 1 to 3 months.
• Enhanced yield on your deposit would be determined by the chosen deposit currency, linked currency, tenure and the pre-agreed conversion rate
• In exchange for the enhanced yield, you give the Bank the right to repay your deposit and interest in either the deposit or linked currency at maturity.
• Depending on what the market exchange rate is between the deposit currency and the linked currency 2 business days before the DCD matures, your invested capital and interest may be repaid at maturity in either the deposit currency or the linked currency exchanged at the pre-agreed conversion rate.
• If the proceeds at maturity are paid in the linked currency and you convert it back to the deposit currency or another currency immediately, the value you receive may be lower than the original deposit amount and a loss could be incurred.

 

Can you give me an example

Deposit currency and amount:	USD100,000
Linked currency:	EUR
Tenure:	1 month
Spot rate at the start of investment:	1.4525 (1 EUR = 1.4525 USD)
Pre-agreed conversion rate at the start of investment:	1.4425 (1 EUR = 1.4425 USD)
Enhanced interest rate:	5.00% per annum
Fixing date:	Two days prior to the maturity date
Redemption upon maturity	If the EUR/USD exchange rate is at or above 1.4425 on Fixing Date, the principal and interest will be paid in USD.
	If the EUR/USD exchange rate is below 1.4425 on Fixing Date, the principal and interest will be paid in EUR.

	Scenario 1 EUR strengthens against USD vs the conversion rate on Fixing Date	Scenario 2 EUR remains constant against USD vs the conversion rate on Fixing Date	Scenario 3 EUR weakens slightly against USD vs the conversion rate on Fixing Date	Scenario 4 EUR weakens considerably against USD vs the conversion rate on Fixing Date
EUR/USD on Fixing Date	1.4625	1.4425	1.4350	1.4125
Principal + interest	USD100,430.55 = USD100,000 + (USD100,000 x 5% x 31 / 360)		EUR 69,622.56 = (USD100,430.55/ conversion rate 1.4425)
Return on investment	USD 430.55		- USD 91.62**	- USD 1,658.13**

* The above scenarios are for reference only. Return depends upon the market conditions on the Fixing Date.

** Assume the deposit is converted back to USD upon maturity and the exchange rate equals to the rate on Fixing Date.

Please note that the spot rate, pre-agreed conversion rate, and enhanced interest rate used in the above examples are assumptions for indicative purposes only.

For further information, please talk to your Relationship Manager, call our Customer Service Centre on +94 11 4 4722 72 or stop by at your nearest Branch. You could also contact us via e-mail wealthmanagementdeskcbh@hsbc.com.lk.