Dual currency deposit

There is a higher risk than with the latter - the depositor can receive less funds than originally deposited and in a different currency.

[1][2] A dual currency deposit (“DCD”) is a foreign exchange-linked deposit in which the principal can be repaid after being converted into the alternative currency at the strike rate at maturity depending on the spot foreign exchange rate.

For this reason some banks offer their clients a product commonly called a DCD+ which includes an interest element to account for this.

Adding this to the deposit redemption-amount means that the amount of currency that will need converting if the option strike is passed at expiry has now increased.

Currency of repayment Since the reference rate on the expiry date (2.0017) is less than the strike rate selected by the investor (1.9950), proceeds will be paid in the base currency (SGD) to the investor on the maturity date.

Here, the base currency (SGD) has appreciated no greater than the strike rate selected by the investor.