Foreign Currency Holding Balances
Banks generally only offer accounts denominated in a single currency. But, suppose you are based in the United States or Canada and receive Euros from one of your vendors. The bank will often immediately convert this into dollars and deposit these funds into your account, perhaps charging you a fee for its effort. In many instances, you will have no control over the exchange rate used to effectuate the conversion. When you next have to pay an invoice in Euros, you’ll have to repurchase the funds, and again your account will be levied with a fee and a commission for the currency conversion. Is there a way to simply hold on to the Euros, avoiding the double fee and currency conversion? What if you would like to convert the Euros into dollars, but are wary of the current exchange rates? Is there a way to hold on to the Euros and wait for a better time to do the conversion?
Yes, there is.
Hold your foreign funds in reserve until needed with our foreign currency Holding Balances.* This service enables you to eliminate currency risk by offsetting incoming foreign funds against outgoing disbursements —saving you bank fees while providing an opportunity to save even more, by waiting for a more favorable time to convert the funds. Used in combination with market monitoring and risk management tools, Holding Balances enable businesses to strategically buy foreign funds when the market is favorable and store them in anticipation of upcoming payment needs.
Furthermore, the funds may be used to execute outgoing payments in the same foreign currency or may be converted into another currency. Holding Balances can be leveraged for cross currency settlement when a cross rate offers a greater potential for savings than the rate against their local currency.
Holding Balances offer cost savings and flexibility, not just for incoming payments, but for forward and spot transactions, as well. Cash management is even easier with the Holding Balance, as scheduled payments can be paid directly from your balance. You can quickly review how many payments are due in 30, 60, and 90 days by utilizing this feature.
*Funds may not be maintained in a Holding Balance for more than 90 days.
