Exchange Position

Exchange Position: Exchange position means difference between total sale and total purchase of a particular Foreign Currency in a particular period. The book in which the exchange position is recorded is called position book.

Open positon: If exchange positon is too much bought or over sold then it is called open position. The ADs are required to work out their open exchange positon daily and report to the Central Bank the positions (over bought/over sold) as at the close of the business on Thursday at each week. The ADs will purchage and sell foreign currencies and will ensure that the prescribed open position limit is not exceeded.

Over Bought or Long Position: If total purchase of Foreign Currency is more than total sales then it is called over bought or long position.

Over Sold or Short Position: If total sales are more than total purchases then it is called over sold or short position.

Square up Exchange Position: If total purchase become equal to tatal sales or difference between total purchase & total sales are negligible then it is called square up exchange position.

The Ads should always be careful to maintain its exchange position within the prescribed limit and always take care of exchange rate fluctuation.