What is a foreign currency deposit?

What is a foreign currency deposit?

This is a savings product . It is a form of time deposits,  but rather than in euros, s and invests in legal currency of third countries other than the euro , but the most common are the British pound, US dollar, Japanese yen, the dollar Canadian and Swiss franc.

One can speak of foreign currency deposits at a fixed rate and variable rate where the returns offered is reference to an index that is not the euribor speaking of these deposits are contracted in currencies other than the euro. A common index is usually the Libor, for example, issued by the BoE.

Source: domesticatueconomia.es.

It is important to ensure that you will not need that money because their availability is not immediate and is indicated for people who receive income in foreign currency recurrently for example a foreign retiree with a second home in Spain or those sophisticated investors willing to seek higher returns in exchange for supporting the vagaries of the currency markets.

It should be borne in mind that, in addition to the variation in the interest rate , you have to have the variation in the exchange rate: so maybe to an investment in the dollar exchange rate is 0.93 acquisition € / USD and maturity of 1.1 € / USD. Although you can also purchase insurance exchange that while some profitability decline is a safety net to cushion against possible losses falls in the value of the currency.

The Guarantee Fund covers deposits in currencies of these credit institutions to the equivalent of 100,000 euros (including exchange rate) in foreign currency with which it operates.

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