4 Foreign Exchange Banking in PK Guide
4 Foreign Exchange Banking in PK Guide CHAPTER - IV Exchange Position Cash flow position There is said to be a position if circumstances are such that a change in a rate will create a profit or loss. If cash inflows and cash outflows are unequal or have mismatched value dates, there is a net cash flow position. Separate net cash flow positions apply for each value date. Net cash flow position = cash Inflow - cash Outflow A positive net cash flow position reflects an excess of cash inflow, over cash outflow, on the relevant value date. The surplus cash will be available for investment. If interest rates rise the return will be higher. If interest rates fall, the return will be lower. A negative net cash flow position reflects an excess of cash outflow over cash inflow on the relevant value date. Assuming there are no idle balances, the account will become overdrawn. The shortfall of cash will require funding. If interest rates rise it will become more expensive to fun...