Euro Deposit

AAA

DEFINITION of 'Euro Deposit'

The equivalent of a money market rate on cash deposits made in the euro currency. Euro deposit rates will usually be quoted as "money market euro deposit rates" and are typically only offered to U.S. investors with minimum investments of greater than 10,000 euros. Euro deposits pay a floating interest rate (like a money market account) and offer the chance for capital appreciation if the euro appreciates against the investor's home currency (presumably the dollar). Euro deposit rates are based on the euro interbank offer rate, which is set by the European Central Bank.

INVESTOPEDIA EXPLAINS 'Euro Deposit'

There has been increased investor demand for cash equivalents in currencies outside of the U.S. dollar. If the dollar decreases in value compared to other currencies, there is little recourse for the investor's loss of global purchasing power, but by holding a euro-denominated asset, the investor can diversify some of his currency risk and possibly reduce overall portfolio risk in the process.

RELATED TERMS
  1. Money Market Fund

    An investment fund that holds the objective to earn interest ...
  2. Transferable Underwriting Facility ...

    A type of underwriting facility that deals in Euro notes. Transferable ...
  3. Euro

    The official currency of the European Union's (EU) member states. ...
  4. Currency Risk

    A form of risk that arises from the change in price of one currency ...
  5. Euro Interbank Offer Rate - EURIBOR

    The rates offered to prime banks on euro interbank term deposits. ...
  6. Euro LIBOR

    London Interbank Offer Rate denominated in euros. This is the ...
Related Articles
  1. Forex Education

    Get To Know The Major Central Banks

    The policies of these banks affect the currency market like nothing else. See what makes them tick.
  2. Options & Futures

    Getting To Know The Money Market

    If you need liquidity and safety on a sum of money, don't forgo potential interest by keeping the funds as cash.
  3. Options & Futures

    Do Money-Market Funds Pay?

    This investment provides security, but its returns may not be adequate for long-term investors.
  4. Forex Strategies

    Is Now the Right Time to Invest in the Euro?

    The euro has been falling...does that mean it's now a bargain?
  5. Forex

    The Pros and Cons of a Weak Euro

    The lingering Eurozone crisis has caused the euro to decline against the U.S. dollar. Who are the real winners and losers if the ECB adopts Quantitative Easing?
  6. Forex

    Why Switzerland Scrapped the Euro

    Why did the Swiss scrap its peg to the Euro and what impact will it have globally?
  7. Forex

    What to Expect After the Swiss Currency Shock

    What to expect for the world economy after the Swiss currency shock.
  8. Investing Basics

    Five Successful Investing Strategies

    The secret to investing is that there is no secret. Success is all about knowing yourself, getting the basics and using both to make the right choices.
  9. Bonds & Fixed Income

    Certificates Of Deposit

    Safety is a hallmark of the traditional certificate of deposit (CD) sold by a bank or credit union.
  10. Bonds & Fixed Income

    The Treasury And The Federal Reserve

    Find out how these two agencies create policies to stimulate the economy in tough economic times.

You May Also Like

Hot Definitions
  1. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  2. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  3. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  4. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  5. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center