Dual Currency Deposit Account
What Is a Dual Currency Deposit (DCD)?
A Dual Currency Deposit is a structured investment product that combines a time deposit with a foreign exchange option. Also known as a Fully Collateralised Option or DCD (Dual Currency Deposit), this product gives the bank the right to convert the customer’s deposit into another currency at a predetermined exchange rate at maturity. In return for granting this right, the customer earns an option premium in addition to interest on the deposit.
The currency in which the principal will remain at maturity depends on a comparison between the agreed exchange rate specified in the contract and the market rate at maturity. If the bank exercises its option, the principal is converted into the counter currency at the agreed exchange rate. Therefore, unlike a standard time deposit, a DCD carries foreign exchange risk and is not principal-protected.
İktisatbank Dual Currency Deposit Products
İktisatbank’s dual currency deposit services include Fully Collateralised Option (DCD) and Barrier Fully Collateralised Option (Knock Out DCD) alternatives. The term, currency pair, agreed exchange rate, option premium and other conditions are determined when the transaction is executed. The explanations and examples below describe how a Fully Collateralised Option works.
How Does a DCD Work?
- The customer and the bank agree on the transaction amount, term, two currencies and agreed exchange rate.
- The full transaction amount is placed in a time deposit for the same term and cannot be used until maturity.
- The customer sells the bank the right to convert the funds at the agreed exchange rate and earns an option premium in return.
- At maturity, the market rate is compared with the agreed exchange rate. If the bank does not exercise its right, the principal remains in the initial currency; if the bank exercises its right, the principal is converted into the counter currency at the agreed exchange rate.
To review exchange-rate levels, visit our Current Exchange Rates page. For detailed information about the product, call Telephone Banking on +90(392)444-4444 or visit your nearest İktisatbank branch.
- The return consists of two components: time deposit interest and an option premium.
- The principal may be converted into the other currency at maturity.
- The product is not principal-protected; exchange-rate movements may result in a loss when measured in the initial currency.
- The transaction amount cannot be used until maturity.
- The minimum transaction amount is USD 100,000 or its equivalent.
- The term, agreed exchange rate, premium and interest rate are determined on the transaction date.
A DCD is intended for customers who monitor foreign exchange markets, wish to use their exchange-rate expectations to seek additional return potential, and accept that their principal may be converted into another currency at maturity. It may not be suitable for customers who do not wish to take foreign exchange risk or who may need access to their funds during the term. Before making a transaction decision, the product conditions, possible outcomes at maturity and risks should be assessed together with a bank representative.
This example is intended for a customer who expects the USD/TRY rate not to rise above the agreed exchange rate or who accepts converting USD savings into TRY at the selected level.
| Initial currency and amount | USD 100,000 |
| Counter currency | TRY |
| Term | 32 days |
| Spot rate at the start of the transaction | USD/TRY 5.9300 |
| Agreed exchange rate | USD/TRY 5.9500 |
| Option rate | 7% (illustrative) |
| Deposit rate | 4% gross (illustrative) |
| Total rate | 11% gross (illustrative) |
Scenarios at Maturity
| USD/TRY rate at maturity | The bank's decision | Outcome for the principal |
| Below 5.9500 | The option is not exercised. | The principal remains USD 100,000. |
| Above 5.9500 | The option is exercised. | USD 100,000 is converted into TRY 595,000 at the agreed exchange rate of 5.9500. |
The option premium is credited to the account on the business day following the transaction date, while the deposit interest is credited at maturity. The further the market rate rises above 5.9500, the greater the opportunity cost arising from converting USD into TRY at a lower rate. The product is therefore not principal-protected.
Important: The amounts, exchange rates and rates of return in the table are illustrative values provided solely to explain how the product works; they do not constitute a current offer or a guarantee of return. The exercise decision and settlement conditions, including where the market rate is equal to the agreed exchange rate, are determined in accordance with the contract.
This example is intended for a customer who expects the USD/TRY rate not to fall below the agreed exchange rate or who accepts converting TRY savings into USD at the selected level.
| Initial currency and amount | TRY 100,000 |
| Counter currency | USD |
| Term | 32 days |
| Spot rate at the start of the transaction | USD/TRY 5.9300 |
| Agreed exchange rate | USD/TRY 5.9000 |
| Option rate | 4% (illustrative) |
| Deposit rate | 7% gross (illustrative) |
| Total rate | 11% gross (illustrative) |
Scenarios at Maturity
| USD/TRY rate at maturity | The bank’s decision | Outcome for the principal |
| Above 5.9000 | The option is not exercised. | The principal remains TRY 100,000. |
| Below 5.9000 | The option is exercised. | TRY 100,000 is converted into USD at the agreed exchange rate of 5.9000; the illustrative equivalent is approximately USD 16,949.15. |
The option premium is credited to the account on the business day following the transaction date, while the deposit interest is credited at maturity. The further the market rate falls below 5.9000, the greater the difference arising from purchasing USD at a higher rate. This exchange-rate loss may reduce or exceed the income earned from the deposit interest and option premium.
Important: The amounts, exchange rates and rates of return in the table are illustrative values provided solely to explain how the product works; they do not constitute a current offer or a guarantee of return. The approximate USD equivalent has been calculated without taking taxes or other possible deductions into account.
- Foreign exchange risk: The principal may be converted into a currency other than the initial currency at maturity. Changes in the value of the counter currency may result in a loss when measured in the initial currency.
- Principal risk: The product is not principal-protected. A loss arising from an adverse exchange-rate movement may exceed the income earned from the deposit interest and option premium.
- Liquidity risk: The transaction amount cannot be used until maturity.
- Limited return: Although the interest and premium to be earned are specified in the contract, exchange-rate movements that differ from expectations may result in a greater opportunity cost or loss.
Current rates, taxes, payment times and other conditions may vary by transaction. The contract and risk disclosures should be reviewed carefully before entering into a transaction.