Ethan830 Mitchell#74

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What is a dual-currency deposit and how is it used in forex markets?

A dual-currency deposit is a structured product where investors place funds in one currency but agree to potential repayment in another at a set exchange rate. For example, depositing USD with a bank but accepting repayment in EUR if EUR/USD hits a predetermined level. Benefits: higher yields than traditional deposits, as investors take on FX risk. Risks: investors may end up holding the less favorable currency if the strike is reached. Institutions use dual-currency deposits for yield enhancement and hedging. Retail traders may encounter them at banks offering “high-yield FX deposits.” Understanding them is key because while they look like savings, they are effectively options disguised as deposits.