Net position


Net position
  A bank has a position in foreign currency when its assets, including future contracts to purchase, and liabilities, including future contracts to sell, in that currency are not equal. An excess of assets over liabilities is called a net "long" position and liabilities in excess of assets result in a net "short" position. A long net position in a currency which is depreciating results in a loss because, with each day, that position (asset) is convertible in to fewer units of local currency. A short position in a currency which is appreciating represents a loss because, with each day, satisfaction of that position (liability) costs more units of local currency.

International financial encyclopaedia . 2014.

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