Banking · Foreign Exchange Risk Management
In the context of foreign exchange risk management in banks, a 'Maturity Mismatch' or 'Gap' primarily arises when:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The premium on a forward contract exceeds the interest rate differential between the two currencies involved.
- 2A bank maintains its entire Statutory Liquidity Ratio (SLR) requirement in foreign currency assets instead of domestic currency.
- 3There is a discrepancy between the timing of cash inflows and outflows for a specific foreign currency.✓
- 4The total value of foreign currency assets is perfectly matched with foreign currency liabilities across all tenors.
Correct answer
There is a discrepancy between the timing of cash inflows and outflows for a specific foreign currency.
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