We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is a Dual Currency Deposit?

K.C. Bruning
Updated: Feb 12, 2024

A dual currency deposit is a money market fund combined with a foreign exchange deposit option. This gives the investor the potential advantage, in addition to the risk, of changes in the wider foreign market. There are several different term options for dual currency deposits. They can range from as long as a year to only one week. This kind of investment is also known as a dual currency instrument.

Dual currency deposit can be paid out in a couple of different ways. If it does not reach a predetermined strike point, the funds will be paid in the original currency. When the investment does reach that strike point, the funds will be converted into a foreign currency, with the enhanced yield paid out in the original currency. A couple of days before the fund matures, the money manager will typically contact the investor to reveal which way the investment will be handled.

In most cases, a dual currency deposit will lock into a particular exchange rate, rather than making returns based on the current rate. The primary risk of a dual currency deposit is the chance of losing money when the locked rate is lower than the current market. This kind of investment can be returned in the original or foreign currency.

One of the primary benefits of a dual currency deposit is that it offers the chance of much higher returns than are usually seen with a low-income fund such as a money market. This is compensation for the additional risk the investor takes by investing in the foreign market. The investor may also improve the chances of a higher return by planning the conversion of funds at the most beneficial time. This flexible situation is known as variable terms. In essence, the investor can decide when to convert based on his or her tolerance for risk.

Some investors will use a dual currency deposit to make gains on cash while simultaneously changing it into useable foreign currency. For example, the profits made on an investment in an individual’s own country can be used in the agreed-upon foreign country in the investment. One of the benefits of managing gains this way is that there are no currency conversion fees. There is also the potential that the foreign exchange rate will be advantageous to the investor.

Many investors who use the dual currency deposit already have more than one kind of currency in their portfolios. The investment can also be used to increase portfolio diversity. This type of investment typically has a fairly high minimum deposit amount.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources
K.C. Bruning
By K.C. Bruning
Kendahl Cruver Bruning, a versatile writer and editor, creates engaging content for a wide range of publications and platforms, including WiseGeek. With a degree in English, she crafts compelling blog posts, web copy, resumes, and articles that resonate with readers. Bruning also showcases her passion for writing and learning through her own review site and podcast, offering unique perspectives on various topics.
Discussion Comments
K.C. Bruning
K.C. Bruning
Kendahl Cruver Bruning, a versatile writer and editor, creates engaging content for a wide range of publications and...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.