Q50038 You as a dealer in foreign exchange

You as a dealer in foreign exchange have the following position in Swiss Francs on 31st October, 2009:

21 7 Capture 43

What steps would you take, if you are required to maintain a credit Balance of Swiss Francs 30,000 in the Nostro A/c and keep as overbought position on Swiss Francs 10,000?

Solution

21 7 Capture 44
21 7 Capture 45

The Bank has to buy spot TT Sw. Fcs. 5,000 to increase the balance in Nostro account to Sw. Fcs. 30,000.

This would bring down the oversold position on Sw. Fcs. as Nil.

Since the bank requires an overbought position of Sw. Fcs. 10,000, it has to buy forward Sw. Fcs. 10,000.

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