Introduction to Currency Position

Position Management

A currency position is created when a transaction involves two or more currencies. For example, when a customer deposits USD into a GBP account. Here, the bank is ‘buying’ USD and ‘selling’ GBP. This creates a position in USD for the bank. Holding USD gives rise to currency exchange risk in that, when the exchange rate moves, the bank may incur a revaluation gain or loss. This risk is managed by a banks treasury function.

Temenos Transact provides functionality to manage the risk by providing up to date currency positions.

Currency Position Management

Maintenance of currency positions is a part of the core accounting functionality and does not need parameterisation.

The POSITION file is updated automatically, only when a transaction in non-local currency impacts position of the particular currency, that is, when a transaction either increases or decreases the position held in a particular currency in the event of a cross currency transaction. If a transaction involves the same foreign currency, that is, debit and credit are in the same foreign currency and in the same amount, position entries will not be raised.

POSITION file is extensively used by the Forex (FX) module and enquiries are used predominantly by dealers.