With the Retail FX Contract, you can switch your existing deposit into another currency. You can do this switch immediately at the current (spot) rates of exchange, or you may book the contract for a future date at a pre-agreed exchange rate (forward). Your decision to choose the alternate currency can be based on your expectations of potential appreciation as well as on the basis of receiving a higher interest rate than on the original currency.
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Here is an illustration (of spot rate conversion) to further explain how you can take advantage of currency movements with the Retail FX Contract:
Examples
| Base Currency | USD | |
|---|---|---|
| Interest Rate p.a. | 1.00% | |
| Alternate Currency | GBP | |
| Interest Rate p.a. in the Alternate Currency (GBP) | 4% | |
| Prevailing Exchange Rate | 1.84 |
- You can sell the USD deposit and buy GBP at the prevailing exchange rate of 1.84. You can then place this GBP fund as a one-month deposit, which will earn you a higher interest rate of 4.0% (this interest rate compares favourably with that of USD interest rate of 1.0%)
- At maturity, if GBP-USD is trading above 1.84, you can sell the GBP into USD, thereby converting back into your original currency (USD) with some capital gains. You would also have enjoyed a higher rate of interest during this period
- If on maturity the GBP-USD is lower than 1.84, you can rebook this deposit at the prevailing rate of interest in GBP
Similar advantages may be availed with forward contracts in other currencies. Some currencies provide a higher rate of interest.
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- Any advice contained in this document is general advice only and does not take into account your personal circumstances. Citibank Singapore Ltd. Terms and Conditions apply for all products held in Singapore Booking Center. Citibank N.A. full Terms and Conditions apply for products held in other booking centers.
- Foreign currency investments are subject to rate fluctuations, which may provide both opportunities and risks. You may experience a loss when you convert foreign currency back to your home currency. Exchange controls may be applicable from time to time for certain foreign currencies. You should therefore determine whether foreign currency investments are suitable for you in the light of your investment objectives, your financial means and your risk profile.
- Important Information for United Kingdom Investors: Citibank International plc. is registered in England with number 1088249. Registered office: Citigroup Centre, Canada Square, London E14 5LB. Authorised and regulated by the Financial Services Authority. Ultimately owned by Citigroup Inc. New York, USA. Compensation under the UK Financial Services Compensation Scheme (FSCS) is not available, owned by Citigroup Inc. New York, USA.
- All rates are only for illustrative purposes and indicative as on 20th January 2004. These rates are not valid for any dealing.
- Citibank Singapore Ltd. Company Registration No. 200309485K.
- A wide range of deposit products.
- Available across a spectrum of returns.
- Portfolio comprises of fixed return products.
