This is a flexible way of depositing money with interest rates based on the local and International Markets. Funds deposited are mainly of short-term nature, extending out to one year duration. Short-term money markets reflect the nation's overall interest rate structure.

Money Market Rates

The current interest rates on a variety of global short-term government and corporate financial instruments. Generally, the rate is based on security, liquidity, size and maturity.

Fixed Interest Rate

An interest rate on a debt instrument that remains the same until debt matures.

Floating Interest Rate

An interest rate that changes according to market conditions. This normally fluctuates on the bank's base rate.

Borrowing

An interest-borrowing rate does not fluctuate with changing market conditions. As borrowers are protected from fluctuations, these rates are normally higher than variable interest rates.

Borrowing at a floating rate

Borrowing at an interest rate that fluctuates according to the Bank's base rate.

Summary

Both Foreign Exchange and Interest Rate products have their advantages and disadvantages. They can be used either individually or in a combination, as part of a portfolio approach.

Treasury Department can :-

• Provide details of the products customers can use to manage these risks.
  
• Provide exchange rates and product prices.
  
• Offer advice and guidance on how customers can use these products to achieve their own risk management objectives.