Dual Currency Investment

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I have been doing dual currency investments for 2-3 years as I have a need for a particular foreign currency.

DCI allows one to earn a higher interest rate while waiting to get converted to a foreign currency at a more favourable exchange rate (by setting a strike price which is lower than the spot exchange rate). Of course, if the spot exchange rate drops below the agreed strike price, one will "lose out".

One needs a medium to long-term investment horizon when going into dual currency investments so that if one gets converted into the alternate foreign currency (assuming this is NOT desired), one can do another round of DCI to convert back to SGD.

The interest rate quoted can be quite high (eg. 18%) as it contains an "option premium" (it is higher when the volatility index shoots up like in August 2007) over and above the fixed deposit rate.

REPLY

If you have made a profit from your investment in Dual Currency products over three years, I am surprised. Perhaps you can send an e-mail to me? I like to discuss your actual experience.