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A Dual Currency Placement is a way for you to achieve a higher rate of return by taking advantage of currency fluctuations. It combines a Time Deposit and a Foreign Exchange option, where you choose to invest in two currencies and the Bank has the right to pay you back in whichever of the two it prefers. In return for this right we pay you an attractive return.
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When you have made all your selections Citi International Personal Bank will calculate your overall return rate (which is made up of 1% interest plus a premium option) based on what you have chosen. The further away from the current exchange rate your strike rate is set, the higher the premium and therefore overall return we will usually offer.
Once your Dual Currency Placement matures at the end of your chosen term, the bank pays you back in the weaker currency - either your base currency with the specified interest return and premium, or your alternate currency with the same return terms.
If the bank chooses to pay you back the alternate currency you will still receive your initial investment and total return but, importantly, all in the alternate currency and at your agreed strike rate (in the above example US Dollars at a strike rate of 0.6835).
In general Dual Currency Placements offer the potential for a higher overall return than standard deposits, though they are only suitable for sophisticated investors who are comfortable with and understand currency fluctuation risks.
You need to consider that if you are paid in the alternate currency and then you need to convert the money back immediately into the base currency you may lose out (or gain) as the exchange rate may be different to your pre-agreed strike rate. This means the product is only suitable for experienced investors who are comfortable receiving the money in either currency, and who are happy to take the currency fluctuation risks.
You should also note that you cannot withdraw your money before the maturity date agreed.
When you open a Dual Currency Placement you are effectively selling us the right to pay you back in whichever of the two nominated currencies we choose, and Citi International Personal Bank pays you a premium plus interest for that right. You may get back the same amount in the same (or base) currency, or the equivalent in your alternate currency. Of course the value of that currency may have changed during the term.
We base our decision on how the values of the two currencies have moved, against your agreed strike rate.
We know that many of our clients are experienced and sophisticated investors, which is why we provide non-advisory products such as Dual Currency Placement. This product is appropriate for clients who understand the risk involved and are happy to receive either currency at maturity, for example if they manage their wealth using both currencies. This could include frequent business travellers or those who are resident in one country but a national of another.
They are only suitable for those who fully appreciate the risks and who are comfortable with the impact that currency fluctuations could have on their money, particularly if they are repaid in the alternate currency.
Other people who could benefit from Dual Currency Placements are:
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