It will allow you to achieve returns in excess of the deposit rates if you assume the risk that the invested capital may be converted at a predetermined rate at the maturity of the transaction. A non-leveraged investment that cannot be closed before the maturity of the term.
Example transactions
- You have HUF savings that you would like to invest for 6 months with a return higher than the deposit rate. If you expect the EUR/HUF exchange rate to be above a certain level (threshold price) in 6 months, or if the exchange rate is below this level in 6 months, you would be willing to convert your forint into euro at the threshold rate, then a dual currency structured investment may be suitable for your purposes.
- By entering into a dual currency structured investment in exchange for a higher return, you take the risk that if the market EUR/HUF exchange rate at maturity is below the threshold rate, your invested forint will be converted into euro at the threshold rate.
- The return on the transaction will be credited to your account in one lump sum in HUF upon the expiration of the investment.
- The transaction cannot be closed before maturity after it has been concluded.
| Transaction parameters | |
|---|---|
| Duration | 6 months |
| Currency pair | EUR/HUF |
| Amount | HUF 100,000,000 |
| Spot rate EUR/HUF at the time of pricing | 328.00 (Reuters: EURHUF=D3) |
| Strike | 325.00 |
| HUF deposit yield for 6 months (%) | 0,00% (annualized, on a 365-day basis) |
| Dual currency transaction yield (%) | 1,33% (annualized, on a 365-day basis) |
| Dual currency transaction yield (HUF) | 675,877 HUF |
- Transaction parametersTransaction parameters
- Duration6 months
- Currency pairEUR/HUF
- AmountHUF 100,000,000
- Spot rate EUR/HUF at the time of pricing328.00 (Reuters: EURHUF=D3)
- Strike325.00
- HUF deposit yield for 6 months (%)0,00% (annualized, on a 365-day basis)
- Dual currency transaction yield (%)1,33% (annualized, on a 365-day basis)
- Dual currency transaction yield (HUF)675,877 HUF
Possible outcomes at option expiration
- EUR/HUF exchange rate is above 325 at maturity -> The HUF account is credited with HUF 100,000,000 capital and HUF 675,877 yield, a total of HUF 100,675,877.
- The EUR/HUF exchange rate is below 325 at maturity -> the forint is converted to the euro at an exchange rate of 325 and 100,000,000/325=307,692.31 EUR is credited to the EUR account and a yield of HUF 675,877 to the HUF account.
- If you have euro savings that you would like to invest for 6 months, with a return higher than the deposit rate. If you expect the EUR/HUF exchange rate to be below a certain level (threshold price) in 6 months, or if the exchange rate is above this level in 6 months, you would be willing to convert your euro into forints at the threshold rate, then a dual currency structured investment may be suitable for your purposes.
- By entering into a dual currency structured investment in exchange for a higher return, you take the risk that if the market EUR/HUF exchange rate at maturity is above the threshold rate, your invested euro will be converted into forint at the threshold rate.
- The return on the transaction will be credited to your account in one lump sum in EUR upon the expiration of the investment.
- The transaction cannot be closed before maturity after it has been concluded.
| Transaction parameters | |
|---|---|
| Duration | 6 months |
| Currency pair | EUR/HUF |
| Amount | EUR 100,000 |
| Spot rate EUR/HUF at the time of pricing | 328.00 (Reuters: EURHUF=D3) |
| Strike | 331.00 |
| HUF deposit yield for 6 months (%) | -0,52% (annualized, on a 365-day basis) |
| Dual currency transaction yield (%) | 1,41% (annualized, on a 365-day basis) |
| Dual currency transaction yield (HUF) | 713 EUR |
- Transaction parametersTransaction parameters
- Duration6 months
- Currency pairEUR/HUF
- AmountEUR 100,000
- Spot rate EUR/HUF at the time of pricing328.00 (Reuters: EURHUF=D3)
- Strike331.00
- HUF deposit yield for 6 months (%)-0,52% (annualized, on a 365-day basis)
- Dual currency transaction yield (%)1,41% (annualized, on a 365-day basis)
- Dual currency transaction yield (HUF)713 EUR
Possible outcomes at option expiration
- The EUR/HUF exchange rate is below 331 at maturity -> The EUR account is credited with EUR 100,000 capital and EUR 713.44 yield, a total of EUR 100,713.
- The EUR/HUF exchange rate is above 331 at maturity -> at the exchange rate of 331, the euro is converted into HUF and 100,000,000*331=33,100,000 HUF is credited to the HUF account and EUR 713 yield to the EUR account.
Benefits
- In the currency of the investment, a higher return can be obtained than the deposit yields available for that maturity.
- The parameters of the transaction, such as the currency pair, the amount to be invested, the threshold price and the maturity, can be flexibly customised.
- The deal does not involve leverage, so your risk is also more moderate.
Risks
- The invested amount may be converted into another currency at a significantly less favourable rate than the market rate at maturity (the strike price determined at the moment of the transaction).
- The transaction cannot be closed before maturity, so the exchange rate risk persists throughout the term.
- Since the transaction cannot be closed before maturity, the capital
cannot be released during the term, which creates liquidity risk and may also
increase the opportunity cost.
Experts
If you have any questions, feel free to contact us.
János Imrei
Head of Department
Edit Orsolya Kovács-Gyimóti
Deputy Head of Department
Borbála André
Sales
Nóra Gordos
Sales
István Fodor
Sales
Péter Huck
Sales
OTP Trader
Flóra Zsófia Margaritisz
Sales
OTP Trader
Nóra Simon
Sales
OTP Trader
Useful documents
These documents in English language to the person concerned
shall be for information purposes only. OTP Bank Plc shall fulfil its obligations imposed by the
legal regulations or requirement of supervisory authority by the documents in
Hungarian language.
In the
event of any discrepancy between the English language and Hungarian language
versions, the Hungarian language version shall prevail.
Information on the suspension of the market making obligation (available only in Hungarian)
Cross-Currency Interest rate swap
Dual currency structured investment
Forward deal in precious metals (gold and silver) transaction
Long-Term Investment Account T+3 FORWARD
Stock exchange spot transaction
Notice on the uEMIR Notice se of LEI CODES
Disclosure of information pursuant to Article 11 (11) of the EMIR Regulation
Information for Clients on MiFID
Global Markets ex-ante cost transparency information (available only in Hungarian)
Systematic internaliser - quotes
Notice on the use of LEI CODES
Direct and indirect clearing services in respect of certain derivative transactions announcement
Notice - on the impacts of the pandemic emergency on the money and capital markets
Terms and conditions
Announcements
