Dual deposits reap high-yield rewards
Background: Dual deposits are a popular way to increase yen deposit rates. In such deposits, the holding bank has the right to redeem the principal of the deposit in another currency – most commonly US dollars – at a predetermined rate.
In this example, at maturity, the client is guaranteed to receive interest of ¥26.5 million while the current deposit rate is below zero.
However, if at maturity US dollar/ Japanese yen has depreciated below 115.50, the holding bank would repay the yen
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