CS Professional Financial Treasury and Forex Management Video Classes
CS Course : We offer the CS Professional online classes through our portal www.takshilalearning.com. Online classes for CS Professional are designed by experienced faculties. Along with Video lectures, proper notes, books, MCQs and various articles on important topics are also provided. In this article, ‘Forex Management’ from CS Professional – Financial Treasury and Forex Management is explained.
Understanding Some Important Terms
Interbank Deals:
Interbank deals refer to purchase and sale of foreign exchange between the banks. In other words, it refers to the foreign exchange dealings of a bank in the interbank market.
In general terms, the interbank market is the top-level foreign exchange market where banks exchange different currencies and those exchanges are referred to as interbank deals.
Cover Deals:
While quoting a rate to its customers, a bank is guided by the interbank exchange rates. The bank adds exchange margin to interbank ask rate in order to determine merchant’s ask rate and it reduces exchange margin from interbank bid rate in order to determine merchant bid rates. Banks cover their transactions entered into with the customers in the interbank market so as to save itself from foreign exchange fluctuation risk. The bank usually tries to keep as low stocks of foreign currency as possible as any adverse change in foreign currency would affect its profits.
If an exporter approaches a bank with some foreign currency, the banks would try to find an importer to sell this foreign currency. However, if a customer cannot be found by the banks, the bank would dispose ofthis foreign currency in the interbank market.
Nostro Account
Nostro account refers to an account that Indian bank holds in foreign currency in banks abroad. Indian Bank would refer its account with the former as Nostro Account also referred as “our account with you”. For example, A Corporation Bank.
Vostro Account
Vostro account refers to an account that a foreign bank holds in Indian currency in an Indian bank. Foreign Bank would refer its account with the former as Vostro Account also referred as “your account with us”. For example- A UK Bank holds an account in the Indian Bank. This account will be referred as Vostro Account.
Loro Account
State Bank of India is having an account with UK Bank. When Punjab National Bank likes to refer to this account while referring to UK Bank, it would be referred as “Loro Account” which is also referred as “their account with you”.
Watch recorded lectures by experienced faculties on the same by clicking Financial Treasury and Forex Mangement notes.
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