Foreign Exchange Markets Offer Significant Potential for Investors

11th May 2010

Ulster Bank Wealth Launches Emerging Market Currencies Strategy

Ulster Bank Wealth today launched a new structured investment strategy focused on emerging market currencies. The ‘Emerging Market Currencies Strategy’ offers investors the potential to generate attractive returns based on the view that emerging market currencies will post stronger returns than developed market currencies.

Commenting on the launch of the ‘Emerging Market Currencies Strategy’, Alan Dunne, Investment Director, Ulster Bank Wealth, said, “The case for investors diversifying their portfolios into emerging markets is well known. Higher rates of economic growth, favourable demographics and rising living standards are all valid reasons for investing in emerging economies. While the sharp rally in equity markets in the last twelve months has eroded some of the value in emerging market equities, there remain compelling reasons for investing in emerging market currencies.”

“Emerging currencies should benefit from stronger growth rates, higher interest rates and rising portfolio flows into their equity and debt markets. Increasingly, investors are differentiating between those economies with strong growth prospects and stable public finances and those without. While the contagion from Greece has dented sentiment towards emerging market bonds and currencies in the last few weeks, we believe over the medium term investors will focus on the improving fundamentals in many emerging economies. ”

The Emerging Markets Currency Strategy provides exposure to a portfolio of the Brazilian Real (BRL), Polish Zloty (PLN) and Chinese Renminbi (CNY) versus the Euro (EUR) and the Japanese Yen (JPY). The Strategy provides 100% capital protection at maturity and offers investors the opportunity to generate returns in excess of deposit rates by capitalising on the expected out-performance of emerging market currencies. The strategy will be affected by changes in currency exchange rates. It should also be noted that this investment strategy could return less than the initial deposit and may not provide any return on investment.

Alan Dunne added, “Given the stronger growth outlook, many emerging economies are further along the road to normalising monetary policy, and interest rates are starting to rise in these economies. In contrast, in the developed world, as bond markets pressure governments to address fiscal imbalances, low interest rates may need to be maintained for longer. Investors looking for higher yields may be attracted to emerging economies which should provide support for these currencies. ”

The minimum investment is €200,000, the term is 3 years and there is 100% capital protection at maturity.