FXCM Inc. of Australia is a leading Forex (Foreign Exchange) trading Company based in Sydney. It has many Forex experts who provide excellent customer services round the year. FXCM offers fast and reliable execution on MT4 platform along with other platforms of Forex transactions. Whether you are a newbie or expert in online Forex trading, FXCM has customized account types and wide range of services for all levels of traders.
FXCM Inc. has the following dealing position in Pound Sterling:
|Opening Balalnce in Barclays Bank London GBP 20000 O/D|
|Opening Currency Position Overbought||£ 5,000|
|T/T (Telegraphic Transfer) Purchased||50,000|
|Issed a Demand Draft on London||20,000|
|T/T (Telegraphic Transfer) Remittance Outward||25,000|
|Bills Purchased on London||75,000|
|Export Bills realized||45,000|
What steps would FXCM Inc. take if it requires to maintain a credit balance of GBP 10,000 in Nostro Account and make it’s Exchange Position square ?
Solution to Forex Trading Problems:
|(ii) Cash Position in Nostro Account|
|Opening Balance||£ 20,000||£ –|
|Purchase of T/T||£ –||£ 50,000|
|Issue of T/T||£ 25,000||£ –|
|Realization of Export Bills||£ –||£ 45,000|
|Total||£ 45,000||£ 95,000|
|Closing Balance||£ 50,000||£ –|
|£ 95,000||£ 95,000|
|(i) Exchange Position||Purchases||Sales|
|Opening Balance- Overbought||5,000|
|Purchase of T/T||50,000|
|Issue of Demand Draft||20,000|
|Issue of T/T Outward||25,000|
|Purchase of Bills on London||75,000|
|Closing Balance- Overbought||10,000|
To maintain a cash balance of 10000 in Nostro Account, FXCM Inc. should sell spot GBP 40,000. This would result in an exchange position of GBP oversold. To square the position, FXCM has to buy GBP 30,000 for forward delivery.
Export bills realized have been taken only in cash position because they would have been entered in exchange position on the date of purchase of bills.