Range Accural

Range  Accural
Range Accrual

Also you can call this product as tunnel deposit. The exchange rate stays in the tunnel during the term. At the begining of the maturity a particular exchange rate band is determined. A premium payment will be done according to the exchange rate being under and upper level of the band during the term agreed. Our customer will get the capital amount deposited at the begining of the term. This product is a capital protected.

Why Range Accrual? Who can benifit from this product?

  • Who finds markets exchange rate low; but want to protect capital amount.
  • Who does not want to exchange between currencies when gaining high level of interest.
  • Investors who wants to gain more than time deposit interest.

Features;

  • The customer determines the two currencies, exchange rate band gap and the term wiht minimum 1 months.
  • The transaction can be priced at the minimum amount of 1,000,000TL and equivalent currency
  • You can gain more with high liquidity currencies like TL, USD, EUR and GBP
  • The price band determines the risk level.
  • The capital amount is not at any risk.(capital protected)
  • Customer does not pay any primium because is in option receiver position.
  • No interest is paid on deposit.
  • Customer gets "coupon" payment at the end of the maturiy date, for the days the exchange rate is at the level they agreed during the term.
  • If the exchange rate stays out of the band gap customer determines there is a risk. If the risk materializes the customer only gets the capital amount deposited at the end of the maturity date.
AmountTL 1,000,000
Term90 day
Spot Market RateUSD/TL 1,8750
Agreement Rate 12,0000 (higher than the band)
Agreement Rate 21,7500 (lower than the band)
Option Primium%12
Indicator Deposit Interest%7


The USD/TL exchange rate will be checked every day if it stays in the band gap or not during the terms. For everyday exchange rate stays between the band gap determined 1,7500 and 2,0000 USD/TL the customer gains %12 (yearly) intereset. If you give your funds to a time deposit account you will be gaining %7 interest. For the days exchange rate is out of the band gap determined 1,75000 and 2,0000 USD/TL the customer does not gain %12 (yearly) interest.

1,75000 < %12 (gross annual interest) < 2,000

If we think the exchange rate USD/TL stays between the band for 60 day and 30 days out of the band during term.

The customer does not get any deposit interest or option primium for the 30 days stayed out of the band. For the 60 days stayed between the band will gain %12 interest (option primium).

Customer;

  • If the customer deposits 1,000,000 TL to a time deposit account with %7 interest rate for 90 day; gross interest earning would be 17,260.27 TL.
  • With this product for the 60 days exchange rate stayed between the band determined our customers earning would be 23,013.70 TL.

At this example If our customer does not deposit the funds in time deposit account; can get the opportunity to get %12 yearly (gross) interest.

The option primium will be paid at the end of the maturity date according to the option conditions.