The money market is a critical segment of the financial system where short-term debt instruments are traded. These instruments typically have maturities of up to one year and are considered low-risk investments offering high safety and liquidity. The money market plays a vital role in helping governments, corporations, and financial institutions manage their short-term funding…
In India, over 90% of treasury operations in the foreign exchange (forex) market occur between banks. These inter-bank foreign currency transactions serve two primary purposes: Understanding the Exchange Rate The exchange rate is the price at which one currency is exchanged for another. It functions similarly to product pricing in a market. For example, just…
The money market instrument is a marketplace for trading in short-term debt investments considered low-risk investments with high safety. It is primarily used by governments and corporations to keep their cash flow steady, and for investors to make a modest profit. The money market ensures a balance between the demand for short-term funds and their…
IntroductionTreasury management refers to the strategic oversight and administration of an organization’s financial assets and liabilities. It encompasses a broad range of activities including cash management, investment planning, funding decisions, and financial risk mitigation. The primary objective of treasury management is to ensure that sufficient liquidity is maintained, cash flows are optimized, financial risks are…
IntroductionThe treasury department in a bank is a critical function responsible for managing liquidity, investments, funding, and financial risk. To ensure effective execution and control, treasury operations are typically structured into three key components: the front office, middle office, and back office. This tripartite structure ensures that transactions are executed efficiently, risks are properly monitored,…
IntroductionIn the banking sector, treasury functions have traditionally been classified as cost centers, primarily focused on managing cash flow, maintaining liquidity, and minimizing financial risks and operational costs. However, in recent years, there has been a notable shift towards positioning treasury as a profit center—a unit that actively contributes to revenue generation through trading, investment,…
IntroductionTreasury management refers to the strategic administration of an organization’s financial resources, with the objective of optimizing the use of surplus funds, maintaining liquidity, minimizing the cost of funds, and mitigating both operational and financial risks. In the context of banks, treasury operations are essential for ensuring financial stability, managing risks, and supporting overall strategic…
IntroductionIntegrated Treasury Management refers to the consolidation of a bank’s domestic and foreign exchange treasury operations into a unified framework. Traditionally, banks maintained separate departments for managing domestic treasury functions—primarily focused on statutory reserve management and fund deployment—and foreign exchange treasury operations—focused on currency risk management and forex-related transactions. The evolution of treasury functions and…
(This post elucidates various terminologies used by banks in their dealing rooms for limit fixed to them in their day to day operations by their management) The Treasury operations in the forex (foreign exchange) market are between the banks. The inter-bank foreign currency operations are taking place for two purposes namely (i). Buying and selling…
In India, over 90% of Treasury operations, in the forex (foreign exchange) market are between the banks. The inter-bank foreign currency operations are taking place for two purposes namely (i). Buying and selling foreign currency on behalf of their customers as an intermediary. (ii). Proprietary trading (buying and selling currencies on its own account) with…
