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Dual Currency Deposit
       
 
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Dual Currency Deposit

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Dual Currency Deposit
A fixed Deposit with variable terms for the Currency of payment.
    
Deposits are made in one Currency, but withdrawals at maturity occur either in the Currency of the initial Deposit or in another agreed upon Currency.  This is a Deposit that creates a foreign Exchange rate Risk for the investor. Similar to a Currency Swap, you can be rewarded or punished for the Risk taken.
    
A dual Currency Deposit is a Derivative instrument which combines a Money Market Deposit with a Currency Option to provide a higher Yield than that available for a standard Deposit. There is a higher Risk than with the latter - you can receive fewer funds than originally deposited and in a different Currency. So one could do a USD/JPY DCD depositing USD and receive JPY.
Posted by  Institute for International Research, Financial Research Associates, LLC
 
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