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Currency Linked Investment


 

Introduction

A Currency Linked Investment is an investment product that involves a currency option which confers on the Bank the right to repay you the principal sum and interest at maturity in the base currency or an alternate currency at the Strike Rate. Part or all of the interest earned on this investment represents the premium on the currency option and the currency risk you are taking.

Product Features

To invest, you need to make the following decisions:

An Alternate currency and the choice of Currency Pair

AUD, NZD, GBP, EUR, JPY, USD, SGD, CAD
Only minimum investment of SGD 50,000 is required.

A Base currency Must be one of the currencies you are holding.
Strike Rate You may choose the strike rate based on your required return.
Tenor Choice of 1week, 2 weeks, 1 month, 2 months, 3 months…up to 6 months.

Minimum Investment Amount and Tenor

The Minimum Investment Amount is SGD 50,000 or its equivalent in the above available currency. The Bank has the right to change the minimum investment amount at any time without prior notice.

Potential Benefits and Risks

• By taking a certain view on the movement of the exchange rates of the two currencies, you may potentially enjoy higher returns.

• A diversification of your investment portfolio

• On maturity, you may incur a loss on your principal sum in comparison with the base amount initially invested if you are paid in the weaker currency.

The following 3 scenarios are for illustrative purposes only:

Assume you invest SGD 100,000

Base Currency : SGD

Alternate Currency : AUD

Current Market Rate : AUD/SGD =1.0000

Strike Rate : 0.9800

Tenor : 1 Month

CLI Interest Rate : 10% (Premium Rate: 9.375%, Normal Interest Rate: 0.625%)

On Fixing day

Scenario 1 Scenario 2 Scenario 3
AUD/SGD Spot Rate is at 1.3300 (Above Strike rate 0.9800) AUD/SGD Spot Rate is at 0.9800 (Equal to Strike rate 0.9800) AUD/SGD Spot Rate is at 0.9700 (Below Strike rate 0.9800)
You will receive  SGD 100,000
+ (30/365 X 10% X 100,000)
You will receive  SGD 100,821.92 / 0.9800 You will receive  SGD 100,821.92 / 0.9800
= SGD 100,821.92 = AUD 102,879.51 = AUD 102,879.51
The return  of your investment will be SGD 821.92 If converting back to SGD at Spot rate of 0.9800, equivalent to SGD 100,821.92, the return  of your investment will be SGD 821.92 If converting back to SGD at Spot rate of 0.9700, equivalent to SGD 99,793.12, representing a loss of   SGD 206.88

Eligible Applicants

Company Customers

Application Requirements

Companies need to pass respective company resolutions before investing in this product. 

Deposit Insurance Scheme

Singapore dollar deposits of non-bank depositors are insured by the Singapore Deposit Insurance Corporation, for up to S$50,000 in aggregate per depositor per Scheme member by law. Foreign currency deposits, dual currency investments, structured deposits and other investment products are not insured. Please visit www.sdic.org.sg for full details.

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