Currency Switch

Go beyond fixed deposits — switch currencies to capture FX gains

Why you will love this   

Structured product composed of time deposit and FX contract(s)

Turn time deposit into FX forward contract(s)

Gain potential returns from FX market movements

How to Invest
Warning Statement

Currency Switch is an unlisted structured investment product involving derivatives. Investment involves risk. The investment decision is yours but you should not invest in Currency Switch unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.

Time Deposits subject to any foreign exchange forward contract under Currency Switch are not protected deposits and are not protected by the Deposit Protection Scheme in Hong Kong.

Features and Benefits
Maximise potential returns

Maximise potential returns

By entering into FX forward contract(s) under Currency Switch, it helps you to capture the potential return from FX trading.

By entering into FX forward contract(s) under Currency Switch, it helps you to capture the potential return from FX trading.

Gain the most from currency hedging

Currency hedging

Hedge against the depreciation of time deposits before maturity.

Hedge against the depreciation of time deposits before maturity.

Seamless FX Conversion

Seamless FX Conversion

On maturity, the principal and interest of the time deposit will be converted to the designated currency of the final FX forward contract at the agreed exchange rate.

On maturity, the principal and interest of the time deposit will be converted to the designated currency of the final FX forward contract at the agreed exchange rate.

Flexible transactions

Flexible transactions

Get unlimited FX forward transactions within the deposit period (for time deposits with remaining period not exceeding 12 months).

Enjoy a wide selection of 11 currencies (HKD, USD, EUR, GBP, AUD, NZD, CAD, JPY, CNY, SGD and CHF)

Minimum time deposit amount for Currency Switch as low as HKD100,000 or equivalent.

Get unlimited FX forward transactions within the deposit period (for time deposits with remaining period not exceeding 12 months).

Enjoy a wide selection of 11 currencies (HKD, USD, EUR, GBP, AUD, NZD, CAD, JPY, CNY, SGD and CHF)

Minimum time deposit amount for Currency Switch as low as HKD100,000 or equivalent.

No Extra Handling Charge

No Extra Handling Charge1

Remarks

  1. Subject to the Terms and Conditions of Investment Account, including "Schedule VI: Currency Switch"

Remarks

  1. Subject to the Terms and Conditions of Investment Account, including "Schedule VI: Currency Switch"

The customer sets up a 3-month HKD time deposit on 2 January 20XX. During the deposit period, customer wants to catch up the uptrend of NZD, he sets up a FX forward contract through Currency Switch as follows:
Time Deposit Details
Principal HKD1,000,000.00
Time Deposit Start Date Jan 2, 20XX
Time Deposit Maturity Date Mar 31, 20XX
No. of days 89 days
Interest Rate 1%
Principal & Interest on Maturity HKD1,002,438.36
Currency Switch Details
FX Forward Contract enter Date Jan 10, 20XX
Sell Currency HKD
Sell Amount HKD1,002,438.36
Buy Currency NZD
Buy Currency Amount NZD199,221.02
Forward Exchange Rate 5.031790

Return Analysis

  Spot Rate on Deposit Maturity Date Value at Maturity Date Net gain / (loss) Rate of Return (Actual%)

1. Best case scenario – Switched Currency spot rate strengthens against Forward Exchange Rate on maturity date

NZD strengthens against HKD

5.123123

NZD199,221.02
(equivalent to HKD1,020,633.79)

HKD18,195.43

1.82%

2. Breakeven scenario – Switched Currency spot rate against Forward Exchange Rate remains unchanged on maturity date

NZD against HKD remains unchanged

5.031790

NZD199,221.02
(equivalent to HKD1,002,438.36)

HKD 0.00

0.00%

3. Losing scenario – Switched Currency spot rate weakens against Forward Exchange Rate on maturity date

NZD weakens against HKD

5.019551

NZD199,221.02
(equivalent to HKD1,000,000.00)

(HKD2,438.36)

-0.24% Loss of interest of the time deposit

4. Losing scenario - Switched Currency spot rate weakens against Forward Exchange Rate on maturity date

NZD weakens against HKD

5.000000

NZD199,221.02
(equivalent to HKD996,105.10)

(HKD 6,333.26)

-0.63%

5. Worst case scenario – Switched Currency spot rate depreciates to zero on maturity date

NZD depreciates to zero

0.000000
(exchange rate down turning to zero)

NZD199,221.02
(equivalent to HKD0.00)

(HKD1,002,438.36)

Loss of entire
Principal Amount plus interest of the time deposit

6. Insolvency scenario – The Bank defaults

If the Bank becomes insolvent or goes into liquidation, you may lose the entire Principal Amount plus interest of the time deposit.

Return Analysis

1. Best case scenario – Switched Currency spot rate strengthens against Forward Exchange Rate on maturity date

NZD strengthens against HKD

Spot Rate on Deposit Maturity Date

5.123123

Value at Maturity Date

NZD199,221.02
(equivalent to HKD1,020,633.79)

Net gain / (loss)

HKD18,195.43

Rate of Return (Actual%)

1.82%

2. Breakeven scenario – Switched Currency spot rate against Forward Exchange Rate remains unchanged on maturity date

NZD against HKD remains unchanged

Spot Rate on Deposit Maturity Date

5.031790

Value at Maturity Date

NZD199,221.02
(equivalent to HKD1,002,438.36)

Net gain / (loss)

HKD 0.00

Rate of Return (Actual%)

0.00%

3. Losing scenario – Switched Currency spot rate weakens against Forward Exchange Rate on maturity date

NZD weakens against HKD

Spot Rate on Deposit Maturity Date

5.019551

Value at Maturity Date

NZD199,221.02
(equivalent to HKD1,000,000.00)

Net gain / (loss)

(HKD2,438.36)

Rate of Return (Actual%)

-0.24% Loss of interest of the time deposit

4. Losing scenario - Switched Currency spot rate weakens against Forward Exchange Rate on maturity date

NZD weakens against HKD

Spot Rate on Deposit Maturity Date

5.000000

Value at Maturity Date

NZD199,221.02
(equivalent to HKD996,105.10)

Net gain / (loss)

(HKD 6,333.26)

Rate of Return (Actual%)

-0.63%

5. Worst case scenario – Switched Currency spot rate depreciates to zero on maturity date

NZD depreciates to zero

Spot Rate on Deposit Maturity Date

0.000000
(exchange rate down turning to zero)

Value at Maturity Date

NZD199,221.02
(equivalent to HKD0.00)

Net gain / (loss)

(HKD1,002,438.36)

Rate of Return (Actual%)

Loss of entire
Principal Amount plus interest of the time deposit

6. Insolvency scenario – The Bank defaults

If the Bank becomes insolvent or goes into liquidation, you may lose the entire Principal Amount plus interest of the time deposit.

Remarks:
i) The interest of HKD is calculated on the basis of 365 days per year.
ii) Net gain / (loss) will only be realized if customer switched the amount back to time deposit currency on Deposit Maturity Date.

Declaration
The above hypothetical examples are for illustrative purposes only. They do not reflect a complete analysis or all possible factors of all possible potential gain or loss scenarios. They are not based on the past performance of the exchange rates of the switched currency and must not be relied on as an indication of the actual performance of the exchange rate of the switched currency or this product. The Bank is not making any prediction on future movements of the exchange rates on the switched currency by virtue of providing the illustrative examples. You should not rely on these examples when making an investment decision.

The scenarios assume no fees and charges incurred. In addition, all calculation results above are rounded off to two decimal places except for the exchange rates, which are rounded off to six decimal places.

The customer sets up a 6-month USD fixed deposit on 2 March 20XX. During the deposit period, customer intends to make use the fluctuation of FX to capture extra potential return, he sets up FX forward contracts through Currency Switch as follows:
Time Deposit Details
Principal USD100,000.00
Time Deposit Start Date Mar 2, 20XX
Time Deposit Maturity Date Aug 31, 20XX
No. of days 182 days
Interest Rate 2%
Principal & Interest on Maturity USD101,011.11
Currency Switch Details
FX Forward Contract enter Date Transaction details Forward Exchange Rate Maturity Date / Settlement Date
Mar 20, 20XX Sell USD101,011.11
Buy HKD783,083.58 		7.752450 Aug 31, 20XX
Apr 20, 20XX Sell HKD783,083.58
Buy AUD131,956.21 		5.934420 Aug 31, 20XX
Jun 30, 20XX Sell AUD131,956.21
Buy GBP73,733.96 		1.789626 Aug 31, 20XX
Jul 15, 20XX Sell GBP73,733.96
Buy EUR83,463.82 		1.131959 Aug 31, 20XX

Return Analysis

  Spot Rate on Deposit Maturity Date Value at Maturity Date Net gain / (loss) Rate of Return (Actual%)

1. Best case scenario – Switched Currency spot rate strengthens against Forward Exchange Rate on maturity date

EUR strengthens against USD

1.222525

EUR83,463.82
(equivalent to USD102,036.61)

USD1,025.50

1.02%

2. Breakeven scenario – Switched Currency spot rate against Forward Exchange Rate remains unchanged on maturity date

EUR against USD remains unchanged

1.210238

EUR83,463.82
(equivalent to USD101,011.09)

(USD 0.02)

0.00%

3. Losing scenario – Switched Currency spot rate weakens against Forward Exchange Rate on maturity date

EUR weakens against USD

1.198124

EUR83,463.82
(equivalent to USD100,000.00)

(USD1,011.11)

-1.00% Loss of interest of the time deposit

4. Losing scenario – Switched Currency spot rate weakens against Forward Exchange Rate on maturity date

EUR weakens against USD

1.189898

EUR83,463.82
(equivalent to USD99,313.43)

(USD1,697.68)

-1.68%

5. Worst case scenario – Switched Currency spot rate depreciates to zero on maturity date

EUR depreciates to zero

0.000000
(exchange rate down turning to zero)

EUR83,463.82
(equivalent to HKD0.00)

(USD101,011.11)

Loss of entire Principal Amount plus interest of the time deposit

6. Insolvency scenario – The Bank defaults

If the Bank becomes insolvent or goes into liquidation, you may lose the entire Principal Amount plus interest of the time deposit.

Return Analysis

1. Best case scenario – Switched Currency spot rate strengthens against Forward Exchange Rate on maturity date

EUR strengthens against USD

Spot Rate on Deposit Maturity Date

1.222525

Value at Maturity Date

EUR83,463.82
(equivalent to USD102,036.61)

Net gain / (loss)

USD1,025.50

Rate of Return (Actual%)

1.02%

2. Breakeven scenario – Switched Currency spot rate against Forward Exchange Rate remains unchanged on maturity date

EUR against USD remains unchanged

Spot Rate on Deposit Maturity Date

1.210238

Value at Maturity Date

EUR83,463.82
(equivalent to USD101,011.09)

Net gain / (loss)

(USD 0.02)

Rate of Return (Actual%)

0.00%

3. Losing scenario – Switched Currency spot rate weakens against Forward Exchange Rate on maturity date

EUR weakens against USD

Spot Rate on Deposit Maturity Date

1.198124

Value at Maturity Date

EUR83,463.82
(equivalent to USD100,000.00)

Net gain / (loss)

(USD1,011.11)

Rate of Return (Actual%)

-1.00% Loss of interest of the time deposit

4. Losing scenario – Switched Currency spot rate weakens against Forward Exchange Rate on maturity date

EUR weakens against USD

Spot Rate on Deposit Maturity Date

1.189898

Value at Maturity Date

EUR83,463.82
(equivalent to USD99,313.43)

Net gain / (loss)

(USD1,697.68)

Rate of Return (Actual%)

-1.68%

5. Worst case scenario – Switched Currency spot rate depreciates to zero on maturity date

EUR depreciates to zero

Spot Rate on Deposit Maturity Date

0.000000
(exchange rate down turning to zero)

Value at Maturity Date

EUR83,463.82
(equivalent to HKD0.00)

Net gain / (loss)

(USD101,011.11)

Rate of Return (Actual%)

Loss of entire Principal Amount plus interest of the time deposit

6. Insolvency scenario – The Bank defaults

If the Bank becomes insolvent or goes into liquidation, you may lose the entire Principal Amount plus interest of the time deposit.

Remarks:
i) The interest of HKD is calculated on the basis of 360 days per year.
ii) Net gain / (loss) will only be realized if customer switched the amount back to time deposit currency on Deposit Maturity Date.

Declaration
The above hypothetical examples are for illustrative purposes only. They do not reflect a complete analysis or all possible factors of all possible potential gain or loss scenarios. They are not based on the past performance of the exchange rates of the switched currency and must not be relied on as an indication of the actual performance of the exchange rate of the switched currency or this product. The Bank is not making any prediction on future movements of the exchange rates on the switched currency by virtue of providing the illustrative examples. You should not rely on these examples when making an investment decision.

The scenarios assume no fees and charges incurred. In addition, all calculation results above are rounded off to two decimal places except for the exchange rates, which are rounded off to six decimal places.

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WAYS TO INVEST

Apply for Currency Switch today

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Alternatively, you can contact us at (852) 3199 9188.

Important Notice and Risk Disclosure

  • This product is NOT equivalent to, nor should it be treated as a substitute for, time deposit. Time deposits subject to any foreign exchange forward contract under Currency Switch are NOT protected deposits and are NOT protected by the Deposit Protection Scheme in Hong Kong.
  • This product is NOT listed on any stock exchange and is NOT covered by the Investor Compensation Fund established under the Securities and Futures Ordinance in Hong Kong.
  • This product is not principal protected. The return depends on the market conditions prevailing on the Exchange Rate. You might be subject to the risk of the fluctuation of the switched currency and could lose all of your investment, including the entire Principal Amount plus interest of the time deposit.
  • The return of this product is linked to the exchange rates of switched currency against the time deposit currency. Movements in exchange rates can be unpredictable, sudden and drastic, and affected by complex political and economic factors.
  • If the investment involves Renminbi, you should note that the value of Renminbi against other currencies fluctuates and will be affected by, amongst other things, the PRC’s government control. You should also note that Renminbi is currently not freely convertible and the offshore Renminbi exchange rate may deviate significantly from the onshore Renminbi exchange rate.
  • The illustrative examples given in this webpage are given as an indication only and should be read subject to the offering documents governing this product (including but not limited to Terms and Conditions of Investment Account, including “Schedule VI: Currency Switch” ), and you are advised to read and understand the terms and conditions before investing this product.
  • Investor should not invest solely based on this promotional material. You should carefully read the offering documentation for a detailed product information and risk factors prior to making any investment decision. If you have any doubt, you should seek independent professional advice.
  • This promotional material is prepared by OCBC Bank (Hong Kong) Limited, and the contents have not been reviewed by any regulatory authority in Hong Kong.
  • In case of discrepancy between the English version and the Chinese version, the English version shall prevail.

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