DCD – Dual Currency Deposit

Dual Currency Deposit (DCD)

Dual Currency Deposit is a product to the customers who want to gain an additional income or an alternative to deposits interest. This investment product is preferred by customers who wants to gain more, with the risk of foreign exchange.
You will be gaining two different profits as DCD option premium and deposit profit.

  • Customer; sells the right of selling or buying in any currency determined, a specific term with certain price to the bank. In exchange gains option premium.
  • The amount you deposit will be in a time deposit account until the maturity date and the customer gains interest from the amount.

Features

  • Customer aims to achieve a high profit by taking an exchange rate risk.
  • This product is not a capital protected, the risk of the transaction varies depending on the movement of exchange rates on the market.
  • The amount available can not be used before the maturity date.
  • The minimum transaction amount is 100.000 USD and equivalent amounts.

Why DCD? Who is suitable for?

  • To our customers who wants to take the risk of gaining extra interest on the interest of the deposit.
  • To the customers who follows the foreign exchange market and wants to gain the future foreign exchange expectations.

Example Transaction 1:

This is suitable for the customers that think the USD/TL exchange rate would not be higher or to the customers who wants to exchange their foreign exchange to TL from a suitable level.

Transaction AmountUSD 100,000 -
Maturity Date32 day
Spot Market Rate1,9300 (usd/tl)
Agreement Rate1,9500 (usd/tl)
Option Primium%7
Deposit Interest%4 (gross)
Total Gain%11 (gross)

If the exchange rate of USD/TL lower than agreement rate 1.9500 at the maturity date:

The bank does not use the right owned according to the primium that is paid, the amount stays as USD.

If the exchange rate of USD/TL higher than agreement rate 1.9500 at the maturity date:

The bank uses the rights owned according to the primium that is paid and the amount will be exchanged to TL with the agreement rate of USD/TL 1.9500.

In both cases option primium will be in the account at the next working day of the transaction date; the deposit interest; will be in the account at the maturity date.

As you can see at the example, the advantage of the transaction is higher than any deposit interest gained in the market. However, the possibility of exchange rates going up very hard at the maturity date; this causes the customers foreign exchange on lower level. It is notcapital protected productYour loss would be much more if the exchange rate at the market is higher than the agreed exchange rate at maturity date.

Example Transaction 2:

This is suitable for the customers that think the USD/TL exchange rate would not be lower or to the customers who wants to exchange their foreign exchange to TL to USD from a suitable level.

Transaction AmountTRY 100,000 -
Maturity Date32 day
Spot Market Rate1.9300 (usd/tl)
Agreement Rate1,9000 (usd/tl)
Option Primium%4
Deposit Interest%8 (gross)
Total Gain%12 (gross)

If the exchange rate of USD/TL higher than agreement rate 1.9000 at the maturity date:

The bank does not use the right owned according to the primium that is paid, the amount stays a TL.

If the exchange rate of USD/TL lower than agreeent rate 1.9000 at the maturity date:

The bank uses the rights owned according to the primium that is paid and 100,000 TL will be exchanged to USD with the agreement rate of USD/TL 1,9000.

In both cases option primium will be in the account at the next working day of the transaction date; the deposit interest; will be in the account at the maturity date.

As you can see at the example, the advantage of the transaction is higher than any deposit interest gained in the market. However, the possibility of exchange rates going up very hard at the maturity date; this causes the customers foreign exchange on lower level. It is notcapital protected productYour loss would be much more if the exchange rate at the market is higher than the agreed exchange rate at maturity date.