Dual Currency Investment

Dual Currency Investment (DCI) is a product of PT Bank Danamon Indonesia Tbk (“Bank”) in the form of structured product which offered by the Bank exclusively to Customers.
• DCI is short term investment and suitable for any customer’s risk preferences. 
• DCI has the primary function of yield enhancement. Investors can also use it as a currency management tool to achieve portfolio diversification.


Features
• DCI is available in 8 foreign currencies, with more than 21 foreign currency pairs possibilities.
• Returns of principal amount of DCI is not guaranteed.
• Offer higher return than an ordinary term deposit.
• Customer can decide on:
- the currency pair to invest (the deposit currency (base currency) & the alternate currency)
- the pre-agreed exchange rate (strike price) between the deposit currency and the alternate currency 
• 2 (two) business days before payment/maturity date, as per condition, Bank will notify customer in which currency the principal and its return will be paid (in either base currency or alternate currency, at a pre-agreed exchange rate)
• No management or subscription or redemption fee
• Offer short term investment period, start from 1 (one) week 
 

Illustration
KEY DATES







ILUSTRATION 1: Customer deposits USD as base currency and selects AUD as alternative currency



Deposit : USD100,000 Currency Pair : AUD/USD
Strike Price : 0.7700 Current Spot : 0.7765
Return Rate : 4% gross p.a. Tenor : 1 bulan

*Scenario 1 :
At fixing date and time, if AUD/USD > 0.7700 (AUD strengthens againts USD), you will receive principal and return in USD:
USD100,000 + [(100,000 x 4% x 29/365) – 20%PPH] = USD100,254.25 nett
*Scenario 2:
At fixing date and time, if AUD/USD ≤ 0.7700 (AUD weakens againts USD), you will receive principal and return in AUD at strike price 0.7700:
USD 100,254.25 / 0.7700 = AUD 130,200.32 nett


If customer receives payment in alternative currency AUD:
- Deposits AUD as base currency
- and selects USD as alternative currency




Deposit : AUD 130,200.32 Currency Pair : AUD/USD
Strike Price : 0.7720 Current Spot : 0.7600
Return Rate : 1.75% gross p.a. Tenor : 2 weeks

At fixing date and time, if AUD/USD ≥ 0.7720 (AUD strengthens againts USD), you will receive principal and return in USD on the strike price 0.7720:

AUD 130,200.32  + [(AUD 130,200.32 x 1.75% x 13/365) – 20%PPH] = AUD 130,265.24 nett
AUD 130,265.24 x 0.7720 = USD 100,564.77 nett

However, if on the fixing date and time, AUD/USD < 0.7720, then customer will still receive the principal and return amounting AUD 130,260.25 nett

ILUSTRATION 2: Customer deposits USD as base currency and selects AUD as alternative currency
 




Deposit : USD100,000 Currency Pair : AUD/USD
Strike Price : 0.7600 Current Spot : 0.7765
Return Rate : 1% gross p.a. Tenor : 1month


*Scenario 1 :
At fixing date and time, if AUD/USD > 0.7600 (AUD strengthens againts USD), you will receive principal and return in USD:
USD100,000 + [(100,000 x 1% x 29/365) – 20%PPH] = USD 100,063.56 nett

*Scenario 2:
At fixing date and time, if AUD/USD ≤ 0.7600 (AUD weakens againts USD), you will receive principal and return in AUD at strike price 0.7600:
USD 100,063.56 / 0.7600 = AUD 131,662.58 nett

If customer receives payment in alternative currency AUD:
- Deposits AUD as base currency
- and selects USD as alternative currency

 


Deposit : AUD 131,662.58 Currency Pair : AUD/USD
Strike Price : 0.7745 Current Spot  : 0.7600
Return Rate   : 0.20% gross p.a.  Tenor : 2 weeks


At fixing date and time, if AUD/USD ≥ 0.7745 (AUD strengthens againts USD), you will receive principal and return in USD on the strike price 0.7745:

AUD 131,662.58 + [(AUD 131,662.58  x 0.20% x 13/365) – 20%PPH] = AUD 131,670.08 nett
AUD 131,670.08  x 0.7745 = USD 101,978.48 nett


However, if on the fixing date and time, AUD/USD < 0.7745, then customer will still receive the principal and return amounting AUD 131,670.08 nett

Risks

•Market Risks
Investment return on maturity date will be effected by currency pair fluctuations. If customer receive the investment return in alternate currency and Customer decide to immediately convert to the base currency, Customer may bear the loss as the investment amount received may be less than the initial investment amount. 
• Liquidity risk
DCI may not be liquidated before maturity date. Should customer wish to execute early termination, customer have to pay early termination fee 
• Other risks:
- Regulatory policy change
- DCI can not be rolled over automatically, hence each DCI placement is new placement
- DCI may not be used as collateral for loan 
- DCI is not guaranteed by Financial Services Authority (OJK) and Indonesia Deposit Insurance Corporation (IDIC)

Mechanism
Please download here to see complete information about Dual Currency Investment (DCI)


Disclaimer
DCI is not a conventional product, but a Structured Product that that combines time deposit with derivative product (options), issued by PT Bank Danamon Indonesia Tbk. DCI is not guaranteed by the Indonesia Deposit Insurance Corporation (IDIC). Customer must carefully consider whether the use of DCI is in accordance with the investment objectives, financial resources, and risk profile of the Customer. Customers are advised to obtain input from independent parties who are experts in their fields if Customer needs financial or legal advice regarding the use of DCI. DCI contains risks that can cause some loss in the principal amount of DCI because it depends on the volatility of currency exchange rates, including at the time of conversion of Alternative Currency to Base Currency.
Early termination before maturity of DCI is not permitted. If the Customer insist to apply for early termination, the customer will be charged an early termination fee determined by the Bank.