Tan Kin Lian's Blog: Dual Currency Deposit (DCD)

Monday, October 13, 2008

Dual Currency Deposit (DCD)

From a journalist:

In Europe the DCD (dual currency deposit) product is generally only marketed to High-net-worth individuals through private banks and is rarely seen in any retail networks, probably because many retail investors in Europe don't speculate in currencies. But in Asia the DCD is a very popular instrument among retail investors.

The product is relatively simple but, as is emerging now, dangerous too. There is no protection on the product and when steep currency movements occur the deposit can be hit badly.

I'm looking into number of products that are denominated in either SG$ or HK$ against the Aus$. About a month ago a lot of investors got burned, and i believe the same has happened over the past week. I will probably also incorporate FX accumulator and decumulator products in the story as there has been some movement there too.

Action: If you have invested in these products and had suffered large losses, and wish to shrae your story (maybe not using your real name), you can send your story to kinlian@gmail.com

5 comments:

ym said...: a few weeks back the RMs wanted to push AUD DCD to me.. i usually do not entertain but i wanted to do an experiment..

so i asked abt USD becoz i knew it was very unlikely USD will fall sharply...

surprise-surprise, the RM conveniently didnt have the USD rate.. such a big and efficient bank dun have usd DCD rates.. hmmmm; October 13, 2008 9:25 AM
Anonymous said...: i almost entered into a DCD for AUD . My RM called me several times and keeps saying the aus/sin is low now... after it came down from 1.31+...so at 1.25 he called and then at 1.23, 1.20 and finally at 1.19, he said lowest already, can enter.
i still hold one a while cos i check the aus/sin chart and the pattern seems like heading downwards... so i told him wait a while more...then came his free gift of a box of tung lok mooncake delivered to my house, i kinda obligated for a while, but thank God i somehow have the prompting not to buy....
my other frens have done so at 1.28 and is nursing the wounds now..; October 13, 2008 2:11 PM
Anonymous said...: I believe the UOB Maxi Yield Deposit is one of the DCDs? And yes, wife was burned badly by the falling NZD and AUD while she was only thinking to earn a better interest rate as be persuade by the RM. What to do now?; October 13, 2008 5:10 PM
Anonymous said...: Unethical marketing really makes my blood boils.; October 14, 2008 8:01 AM
Anonymous said...: To be fair, one needs to do your own research on forex movements and the economic factors/ reasons that move each currency. For example, the recent fall in the AUD is due to:
a. Intense risk aversion - causing massive unwinding of Yen / Aud carry trades
b. fall in commodity prices - which is in part
c. recent falls in RBA interest rates
d. Flight to US treasuries as a global reserve currency due to fear and panic of investors.

you need to understand such basics before you embark on say an investment in AUD. One cannot just blame the RM although i do think they need to explain some of this to u .

regards
Michele; October 14, 2008 10:15 PM