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Dual Currency Placement

Earn a higher rate of interest than with a traditional deposit account

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.

What do you do?

1.
First you chose the amount and a base currency you want to invest in, for example you may choose to invest £50,000 in Sterling. Other currency options are Euro, US Dollars, Australian Dollars, Turkish Lira, Japanese Yen, Canadian Dollars and Swiss Francs. The minimum investment is US$20,000 or currency equivalent.
2.
Next you choose an alternate currency from the options listed above, in which you would be happy to receive your money back. For example you might choose US Dollars if you frequently travel to America.
3.
Then you choose a term – either one week, two weeks or 1 month.
4.
Now you agree a ‘strike price' which is an exchange rate you are comfortable with, in the event that the bank pays you back in your alternate currency choice. If the current exchange rate for USD to GBP = 0.6935 for example, you might decide you are happy to receive your principal plus return back at a rate of 0.6835 at the end of your chosen term.

Take advantage of a Dual Currency Placement

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How does it work?

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.

Are there any drawbacks?

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.

Why does the bank decide the currency on maturity?

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.

Who do they suit?

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:

  • Clients who are happy to accept the currency fluctuation risk for the potential of higher returns than traditional deposits.
  • Those who realise that the overall return may be less than they would receive on a straightforward Time Deposit, but are happy to accept this risk.
  • Those who believe that the exchange rate of a particular currency will remain stable.
  • Those who are happy to take out the product on a non-advisory basis. Citi International Personal Bank helps you to arrange a Dual Currency Placement quickly and easily, but we do not offer advice.

Take advantage of a Dual Currency Placement

Already a client?

Contact your Relationship Manager

Interested in joining us?

Start managing your wealth - apply now
Citi