Potentially enhance your returns by tying your investments to the FX markets.

Who Should Invest

  • You want to enhance your returns via FX market performance
  • Principal loss is acceptable
  • You prefer a short investment tenure and have no interim liquidity needs
  • Wish to give up certain premium but instead to reduce the FX risk from vanilla Premium Currency Investment

How to Invest

The investment process of an Enhanced Premium Currency Investment is similar to that of a Premium Currency Investment, however your FX risk is reduced by introducing knock-out / knock-in features.

Knock-Out Enhanced Premium Currency Investment

The principal FX exchange risk is eliminated and the return is locked if a specified market condition is triggered:

  • The investor selects the principal currency, an alternate currency and the investment tenure
  • The bank quotes a conversion rate, investment return and trigger rate
  • If the market rate touches the trigger rate before fixing day, the principal and investment return will be paid in the base currency with no FX exchange risk
  • If the trigger rate was never touched during the investment period, the bank compares the market and conversion rates on the fixing date to decide the repayment currency at maturity
Knock In Enhanced Premium Currency Investment

The principal FX exchange risk will not incur until a specified market condition is triggered:

  • The investor selects the principal currency, an alternate currency and the investment tenure
  • The bank quotes a conversion rate, investment return and trigger rate
  • If the trigger rate was never touched during the investment period, the principal and investment return will be paid in the base currency with no FX exchange risk incurred
  • If the market rate touched the trigger rate before fixing day, the bank compares the market and conversion rates on the fixing date to decide the repayment currency at maturity

Example

Knock-Out Enhanced Premium Currency Investment

Investor's View on the Market The investor expects the AUD/USD exchange rate to rise to 0.7820 but not fall below 0.7620
Principal Currency USD
Alternate Currency AUD
Investment Tenure 3 months (91 days)
AUD/USD Spot Rate 0.7670
Conversion Rate 0.7620
Trigger Rate 0.7820
All-in Rate 5.00% p.a.
Scenarios Analysis

For a USD100,000 investment

  Scenarios Fixing Rate at Maturity Currency Returned All-In Return Return (Net of Principal)
Scenario 1 Trigger rate has been touched before fixing day Doesn't matter whether the USD appreciates or depreciates against the AUD USD USD100,000 + USD100,000 × 5% × (91/360) = USD101,263.88 Gain = USD1,263.88
Scenario 2 Trigger rate is never touched before fixing day USD depreciates against AUD on fixing day 0.7630 USD USD100,000 + USD100,000 × 5% × (91/360) = USD101,263.88 Gain = USD1,263.88
USD appreciates slightly against AUD on fixing day 0.7610 AUD (principal) USD (yields) 100,000 / 0.7620 = AUD131,406.04
100,000 × 5% × (91 / 360) = USD1,263.88
Gain = USD1,158.90 (equivalent)
USD appreciates significantly against AUD on fixing day 0.7510 AUD (principal) USD (yields) 100,000 / 0.7620 = AUD131,406.04
100,000 × 5% × (91 / 360) = USD1,263.88
Loss = USD179.68 (equivalent)

Notes: If the trigger rate was touched, the investor will receive the yields 2 days later and the principal on maturity date.

Important Information

Friendly Reminder: Any information about individual Wealth Management products offered by Standard Chartered Bank (China) Limited ("Bank") is subject to announcement on the Bank's official website.

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