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A Range Deposit may suit you if you are seeking the opportunity of interest rate enhancement and are of the view that the FX^ rate is likely to stay between a certain range during the investment period.
You will need to select your desired currency pair, decide on the range of the FX rates and choose the investment term and principal. You will then be advised of both the minimum and maximum interest rates that you can earn.
How does it work?
If the FX rate of your desired currency pair is always within the range you set, your return is calculated at the maximum interest rate on the Maturity Date. If anytime before maturity the FX rate of your desired currency pair is equal to or above the ceiling or the floor of the range, your return will be calculated at the minimum interest rate on the Maturity Date. We will notify you if the FX rate touches the limit of the range you set.
You hold the view that in the following year AUD/USD FX rate will fluctuate between 0.7450 and 0.8550. You decide to invest your funds in a Range Deposit as there is an opportunity to earn a higher interest rate if your view is correct. After you select the principal, term and range of the FX rates, your Relationship Manager provides you with the following offer:
Example 1
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You select the
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Maximum and minimum interest rate
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Floor or ceiling touched anytime before maturity
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Principal
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AUD100,000
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Maximum interest rate: 12.00% p.a.
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No
Interest = AUD12,000
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Currency pair
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AUD/USD
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Ceiling FX rate
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0.8550
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Floor FX rate
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0.7450
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Minimum interest rate: 1.00% p.a.
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Yes
Interest = AUD1,000
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Start date
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15 Dec 2007
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Maturity date
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14 Dec 2008
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You consider the offer in Example 1, however are concerned that the AUD/USD FX rate may trade above 0.8550 before the Maturity Date. You contact your Relationship Manager to requote on the basis that the ceiling is increased to 0.8750 (see below).
Example 2
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You select the
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Maximum and minimum interest rate
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Floor or ceiling touched anytime before maturity
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Principal
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AUD100,000
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Maximum interest rate: 9.50% p.a.
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No
Interest = AUD9,500
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Currency pair
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AUD/USD
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Ceiling FX rate
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0.8750
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Floor FX rate
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0.7450
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Minimum interest rate: 1.00% p.a.
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Yes
Interest = AUD1,000
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Start date
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15 Dec 2007
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Maturity date
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14 Dec 2008
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A standard term deposit with the same term and principal (interest rate: 6.50%p.a.) would earn AUD6,500 in interest.
After reviewing your offers, you decide which is more suitable and contact your Relationship Manager to contract the agreement.
^FX rate mentioned in this webpage refers to Spot Exchange Rate which is defined in Currency Linked Structured Deposit Terms and Conditions.
Important Notice: The illustration has been prepared for dissemination to you for information purposes only and any statements as to past performance do not represent future performance. The illustration does not purport to contain all matters relevant to any particular investment or financial instrument and all statements as to future matters are not guaranteed to be accurate. In all cases, anyone proposing to rely on or use the illustration should independently verify and check the accuracy, completeness, reliability and suitability of the illustration and should obtain independent and specific advice from appropriate professionals or experts. The illustration is not intended as an offer for the purchase or sale of any financial instrument.
Investment involves risk. Unlike traditional deposits, CLSDs have an investment element and returns may vary. Before entering into a CLSD with us, you should (i) consult your own advisers on the legal, regulatory, tax, business, investment, financial and accounting implications of the CLSD; (ii) carefully consider whether the CLSD is appropriate for you in light of your investment objectives, experience, financial and operational resources, and other relevant circumstances; (iii) understand the nature of the CLSD and the related contract (and contractual relationship) including, without limitation, the nature and extent of your exposure to risk; and (iv) understand any regulatory requirements and restrictions applicable to you. In the event that you choose not to seek advice from a licensed or an exempt financial adviser, you should carefully consider whether the CLSD is suitable for you.
National Australia Bank Limited, Singapore. Reg. No. F02979K.
National Australia Bank Limited ABN 12 004 044 937 is incorporated in Australia.
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