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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 |
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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) |
- Assume the exchange rate of AUD/USD is 0.7420 on the investment date.
- The interest rate are quoted as of 11 July 2005 and are for reference only. They do not represent the actual returns, if any.
- 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
- The above information is for reference only and does not constitute any offer or solicitation to subscribe or redeem.
- Currency-Linked Contract is not a protected deposit and is not protected by the Deposit Protection Scheme in Hong Kong.
- 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.
- 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.
- 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.
- 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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