Citibank N.A., UAE offers major currencies for the term loan (such as USD, EUR, GBP, CHF, JPY, AUD, CAD). Depending on your investment objectives or hedging strategy, you may convert the current loan currency to another currency after a discussion with your Relationship Manager or Treasury Specialist.
Hypothetical example:
Assuming you have a loan of USD 100,000 at an interest of 2% per annum, with the expectation of JPY depreciating against USD, you may convert your USD loan to JPY for the lower interest rate of 1% per annum, at the prevailing foreign exchange (FX) rate.

Please click here to see the Secured Facility Lending Rates for available loan currencies.

The table below illustrates the performance of the loan after the currency conversion.

The rates quoted in the illustration above are (a) assumed to included bank spread; and (b) not indicative of past or future interest rates or spot FX rates.

Please note the following points when doing loan currency conversions:

• Ability to do loan currency conversions is subject to your portfolio having sufficient margin. Margin shortfall due to appreciation in current loan currency will impact ability to do loan currency conversions. Margin call can result from loan currency conversions due to FX fluctuations resulting in the appreciation of the new loan currency against your previous loan currency.
• Different loan currencies offer different interest rates, some higher and some lower on relative terms.
• Every loan currency conversion will involve a spot FX transaction where the FX quoted to you includes the bank spread.
• Funds will be debited from your checking/savings account to service your loan interest. If the currency of your checking/savings account is different from the currency of the loan, FX conversions (inclusive of bank spread) will be carried out to convert your funds to service your loan interest.
• Your monthly statement will show your outstanding loan amounts. For details of your loan switch transactions, please refer to your FX transaction advices. 
• If you choose to opt for an FX order watch instruction, the loan currency conversion will occur if the chosen target Fx rate is reached during the validity period. The maximum order validity is 1 month. The client FX rate is the target interbank rate plus Citi’s FX spread. Post the validity period the order will automatically expire and not auto renew. You are required to provide new instructions to proceed with renewal of the order if you so desire.

The below table illustrates a Simple FX Order watch actions for a loan swap instruction placed on 1st April 2024 at a target client rate of USD/JPY = 105 for a period of calendar 30 days on an USD loan:

Client can also opt to place a combination of simple FX Order Watch like below:

• One Cancels the Other (OCO) order: you place two orders at the same time. Whichever target is hit first, that trade is executed, and the other order is automatically cancelled. If neither target is hit by the end of the term the order expires.

The below table illustrates the OCO Order watch actions for a loan swap instruction placed on 1st April 2024 at a “client profit taking target rate” of USD/JPY = 105 or a “client stop loss target rate” of USD/JPY = 100 for a period of 30 calendar days on a JPY loan

Below orders are a combination of above order watch types:

• If Done (ID) order

It consists of 2 simple orders whereby the 2nd order (then-leg) will only be watched and executed if the 1st order (if-leg) is done. It is usually a 2nd take-profit or stop-loss order left after a 1st order to open new position.

• If Done, One Cancels the Other (IOO) order

It consists of 3 orders whereby if the 1st order (If- leg) is done, the 2nd and 3rd orders (then - legs) will be watched. When either one of the 2nd and 3rd orders is executed, the remaining one will be automatically cancelled. It is usually used by customer to open a position with 2 subsequent orders to either take profit or stop loss.

Foreign Exchange and Interest rate risks

• The Foreign Exchange market is volatile, and investing in foreign currencies can be risky. Commensurate with these risks, is the potential for higher returns but also higher losses. When you switch your loan currency, you will suffer losses if your new loan currency appreciates against your original loan currency, even if the interest rate charged on the new loan currency may be lower. You are subject to margin call and you may be required to top up your account if there is insufficient margin.
• Please be reminded that when you switch your loan currency, you may suffer losses if your new loan currency appreciates against your previous loan currency, even if the interest rate on the new loan currency may be lower. This is illustrated in Scenario 1 above.
• The FX rate quoted to you when confirming the transaction details will include the bank spread.
• When the currency of your loan is different from the currency of your underlying collateral, the lending value of your portfolio will be subject to cross-currency hair-cuts. In addition, if the currency of your loan appreciates against the currency of your underlying collateral, you may experience a loss when you convert your underlying collateral to the currency of your loan to repay the outstanding loan amount.
• You should therefore determine whether any foreign currency loan is suitable for you in the light of your financial circumstances, needs and objectives
• You understand that the Foreign Exchange Order Watch Service allows you to place a Limit Order to buy and/or sell specific foreign currencies. Each Limit Order placed by you is valid for a specific period as confirmed to you. The Limit Order will be executed only if the market price (as determined by you) reaches the customer price (which is inclusive of bank commission). Under certain adverse market conditions, it may be difficult or impossible to execute the Limit Order. Orders are live during market hours, and are not executable when the underlying interbank market is closed. You are fully responsible for all orders that are placed, and any cost resulting from any unwinding of any order will be borne by you.
• “Limit Order” means an order that you place to buy or sell a financial instrument at its specified price limit and for a specified size. The Limit Order will be triggered for execution when the price of that financial instrument reaches the specified level and the specified size of the order is available. Subject to the paragraph above, once the Limit Order has been triggered at the specified level and size, the order will be executed at the same price specified in the Limit Order.

Click here to view the loan currency switch fact sheet.