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Currency-Linked Contract

Currency-Linked Contract is a contract linked with a currency option that aims to offer you investment income and meet your financial needs for foreign currencies. Depending on the market situation and your financial needs, you may be able to get better returns.

How does a Currency-Linked Contract work?

Simply select one of nine base currency (e.g. HKD, USD, EUR, GBP, CAD, JPY, AUD, NZD and CHF, etc.) and a linked currency which you may be paid at maturity. You can choose a investment period of 1 week, 2 weeks, 1 month, 2 months, 3 months, 6 months and 1 year. We will fix an annual interest rate and a strike rate at the time when the deal is made. ?At maturity, the principal and its earnings will be paid in the Base Currency or Linked Currency whichever has depreciated against the other.

Illustration

Base Currency

USD

Linked Currency

AUD

Investment Amount

USD100,000

Trade Date

11 July

Effective Date

13 July

Determination Date

18 July

Maturity Date

20 July

Investment Period

7 days

Interest Rate

18.37%

Strike Rate

AUD/USD 0.7420

 

On the Determination Date,

  • if the AUD/USD exchange rate is equal to or higher than 0.7420, you will receive principal and interest in USD at maturity.
  • if the AUD/USD exchange rate is lower than 0.7420, you will receive principal and interest in AUD at maturity.

Case for the Currency-Linked Contract

(for an investment period of 1 week with a principal amount of USD100,000)
Type of Deposit
Interest Rate2
AUD/USD Exchange Rate on the Determination  Date
P+I at Maturity
USD Equivalent at Maturity3
Profit / (Loss)
High Yield Currency-Linked Deposit
18.370%p.a.
0.7440
USD100,357.19
USD100,357.19
USD357.19
0.7420
USD100,357.19
USD100,357.19
USD357.19
0.7400
AUD135,252.28
USD100,086.69
USD86.69
0.7380
AUD135,252.28
USD99,816.18
(USD183.82)
  1. Assume the exchange rate of AUD/USD is 0.7420 on the investment date.
  2. The interest rate are quoted as of 11 July 2005 and are for reference only. They do not represent the actual returns, if any.
  3. Assume the exchange rate of AUD/USD on the maturity date is the same as that on the determination date.

Currency-Linked Deposit Return & Risk Analysis

Minimum Investment Amount

The minimum investment amount for Currency-Linked Contract is just HKD38,000 or USD5,000 (or its equivalent in any other foreigh currency).

Tailor-made Contract to Suit Your Needs

We understand that a standard contract may not fit all customers, that's why we also offer tailor-made Currency-Linked Contract. If your investment amount reaches HKD200,000, USD30,000 (or its equivalent in any other foreigh currency) or above, you can specify the strike rate, investment period and the currencies that will fit your unique needs.

Greater Flexibility with Overdraft Facility

If you require additional cash during the investment period, we can offer you an overdraft facility that allows you to manage your finances with greater ease and flexibilty, and at the same time enjoy higher returns from the contract.

How to find out more

Risks Disclosure

  1. The above information is for reference only and does not constitute any offer or solicitation to subscribe or redeem.
  2. Currency-Linked Contract is not a protected deposit and is not protected by the Deposit Protection Scheme in Hong Kong.
  3. The returns on Currency-Linked Contract are limited to the predetermined interest amount and will depend on the market conditions prevailing on the determination date.
  4. Investment in the Currency-Linked Contract carries the risk of exchange rate fluctuation of the linked currency, leading to the possible loss of some or all of the principal and interest amount.
  5. You should perform your own due diligence on this investment or seek independent tax, accounting, legal, financial and other professional advice prior to the placement of the Currency-Linked Contract.
  6. Currency-Linked Contract cannot generally be cancelled or withdrawn prior to the agreed maturity date without the consent of the Bank.


 

 


 


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