Dual Currency Investment

Dual Currency Investment

What does Dual Currency Investment mean?

Dual Currency Investments includes investing in fixed deposits in different market currencies which provides higher returns. Dual currency investments are a combination of two financial products namely options and deposits. These investments range fairly from 1 week to 3 months and therefore are short-term investment products. The investment is for a shorter tenure but can help maximize profits. The returns on these investments suffer if there are foreign exchange fluctuations. The amount (currency) received on maturity is different from that of the invested currency in this type of investment. In these investments, the investor has to pair currencies namely as the base currency and alternative currency.

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How does it work?

In the case of dual currency investment, you have the option of choosing a base currency as well as an alternative currency for investment from a variety of currencies. You may select your basic and alternative currency from the available currencies, including the Singapore Dollar, the United States Dollar, the Hong Kong Dollar, the New Zealand Dollar, the Australian Dollar, the British Pound, the Euro, the Canadian Dollar, the Swiss Franc, and the Japanese Yen. As an investor, you use this product to speculate that you can get better returns, however, you should still be prepared for higher costs. The principal amount you are investing in is not covered product and you must agree on the terms of the principal amount, the strike price, the currency, and the maturity date with the bank.


Let us consider that Mr. Murthy wants to invest $1,00,000 in USD. He is comfortable holding British Pound as an alternative. The strike price between USD and GBP is 1.3092 and the duration is 1 month. The Interest rate is 8% p.a. The maturity amount will be as follows:

USD increases

GBP decreases

Strike price 1.3092

Mr. Murthy’s USD is converted to GBP at 1.3092

At maturity, Mr. Murthy will receive a GBP amount of USD 1,00,657.53 (Principal +Returns) ÷ (1.3092) (Strike Price)

= GBP 76,884.76

(Returns = ($1,00,000 * 8% * 30/365) = $657.53)

The GBP on Maturity is 76,884.76

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Benefits & Risk:


  1. This investment helps in maximizing profits as interest rates are higher than the usual financial instruments.
  2. It gives the investor the opportunity to invest in various foreign currencies like USD, GBP, YEN, etc.
  3. These investments are flexible in nature as it enables the investor to choose the time span of investment and also the alternative currency as per his comfort.
  4. Quick returns as these instruments are short-termed.


  1. Foreign Exchange fluctuations affect the interest rates thus reducing returns.
  2. Exchange rate risk arises in case of differences in fixing time/ fixing date.
  3. Early termination risks arise if the investment is terminated before maturity.


With the emergence of such investments, the global markets have opened up for the world to invest. The concept of Dual Currency Investment is fairly practiced by all major banks as it attracts more investors. With the operations of dual currency accounts by banks, the investors are benefitted from the knowledge of the professionals, as the RM’s would rightly suggest the investor as to where he should invest depending on his risk appetite.


Author: Urvi Surti

About the Author: Urvi is a commerce graduate and has a keen interest in Finance. She has completed her Chartered Wealth Management (CWM) from the American Academy of Financial Management and is currently pursuing a career in Financial Risk Management (FRM).


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