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When you operate internationally you need to manage your finances across a range of currencies, but exchange rate fluctuations can make a significant difference to the value of your wealth.
When you invest in a Time Deposit you may want to hedge the currency fluctuations that could occur when it matures - by arranging a Foreign Exchange Forward (FX Forward). You can pre-book an agreed exchange rate for the date your Time Deposit matures. So whatever happens to the value of either currency you know exactly what you will receive with your Time Deposit.
If you have a Time Deposit with Citi International Personal Bank, you can enter into an agreement to exchange a specific amount of one currency for another at the date your Time Deposit matures. The rate you are quoted will depend on a number of factors, such as the current exchange rate and the length of time between the initial agreement and the date you want to make the exchange.
Foreign Exchange Forwards can be arranged from any funds held in a Time Deposit against a range of 12 currencies. The forward can be set for the maturity date of the Time Deposit when you will still receive the full interest payable.
You can set your Foreign Exchange forward amount up to 100% of your Time Deposit's value, with a minimum size of US$20,000 (or currency equivalent).
Foreign Exchange Forwards suit clients who are saving in a Time Deposit and who need access to their money in more than one currency. Because they offer certainty and transparency they are suitable for clients who want a guaranteed exchange rate when their Time Deposit matures.
Those clients that want to hedge against currency fluctuations are particularly suited to Foreign Exchange Forwards, especially those who feel that the exchange rate they are locking into is worsening. For example, if you have a Time Deposit in US Dollars that you want to convert to Sterling in a month's time, you could simply convert your actual Time Deposit in a month, although you don't know what the exchange rate will be. Or you could lock into an agreed rate now, giving you peace of mind that whatever happens to the exchange rate, you know exactly what you will be getting.
By taking a Foreign Exchange Forward you remove any doubt, as you know exactly what exchange rate you will receive. However, it is possible that you would have been better off simply exchanging your money at a future date. Or you might have been worse off – it depends what happens to exchange rates.
Foreign Exchange Forwards are complex products that are appropriate for those who have the knowledge and experience to understand the risk involved. Citi International Personal Bank makes it easy for clients to arrange them on a non-advisory basis via your Relationship Manager. This means we act on your instructions but are not able to give advice on FX Forwards.
Please note: Be aware that you will not be entitled to withdraw or cancel your Time Deposit or your FX Forward contract. Please read our general terms and conditions before opening this product.
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