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Dual Currency Deposit (DCD)

Dual Currency Deposit (DCD)

FOREIGN CURRENCY CONVERTER

CORPORATE CENTERS

DCD is a type of transaction in which the deposit of the customer is secured as collateral, and the bank pays a premium to the customer for the transfer of the right to buy or sell a foreign currency on a specified date and at a specified rate.

You can perform your DCD transactions through our nearest branch.

Features

  • Due to the collateral requirement of the transaction, the deposit of the customer is secured as collateral against the options transaction. The amount is blocked in the customer’s deposit account throughout the term.
  • The customer sets the contractual price (the strike price) with the bank based on the market price (spot price) for a specific term and commits to convert his/her currency to the other currency – notwithstanding the exchange rate – at the maturity. 
  • Thus, the customer sells an option and in return gets an option premium from the bank with the same maturity date in addition to the interest earned on his/her deposit. 
  • Maturity date and the differance between the contractual price and the market price directly impacts the premium paid to the customer.
  • The amount used in a DCD transaction is blocked in the deposit account for the duration of the term. 

Benefits 
  • Enables high returns by accepting the currency risk. 

Important Reminder 
  • The principal may loose value due to the inherent currency risk (any movement in the exchange rates contrary to the customer’s expectations may result in a loss on the principal).
  • Preterm payments are precluded.

Tax Considerations 
  • 15% withholding tax over the interest earned on the deposit, and 10 % over the options premium apply. 

Target Customer Groups 
  • Customers who trade in the foreign exchange, are acquainted with the product, and will to accept the inherent currency risk.
  • Customers who will to carry a certain amount of risk in their investments. 
  • Contact our branch offices for transaction lower limits. 

Who can take advantage of this product?

  • Commercial companies 
  • Corporate companies

Foreign Currency Converter

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Currency Buy/Sell

CORPORATE CENTERS

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