Forex and Treasury Management

Submitted to: Mr. Sunil Gokhale Sir

Date of Submission : 30th September 30,
2021

Submitted by: Soumya Agrawal

PRN: 20020942063 Division: B

Email [Email Here]

 Introduction
The impact of covid-19 disease pandemic is unparalleled and felt across the globe.
The pandemic affected all sorts of work across the world deeply. In addition to the
threat to public health, the economy, banks and financial sectors were hit hard in this
period and that affected a large population. This started giving a huge blow to the
labor markets, economies and enterprises, including global supply chains, leading to
widespread business disruption.

The main role of a treasurer in layman’s term is to account for the money received,
spent and invested by an organization. Whether working for a large multinational
organization, a charity, a government organization treasury offers a diverse and
lucrative career that can set you on the path to the most senior roles in business and
finance and open up doors to international opportunities. Duties will vary according to
the job role and level.

The major functions of a treasurer include:

• The general overview of financials including proper financial system adoption along
with record keeping, budget presentation etc.

• Effective monitoring and reporting of the organization funding strategies as well as

compliance with the legislation.

• Prepare and forecast budget along with advice on the various financial implications

• Assurance of proper fixed asset adoption and stock availability. Therefore, we can
conclude that a treasurer is responsible for the effect
The treasury of an organization is responsible for the overall financial health and
management. There are various risks associated with the financials and the major ones
include: Liquidity risk which focuses on the availability of cash and cash equivalents in an
organization Price risk which includes the prices of the different commodities. Credit risk
which includes the financial loss. Operational risks which include the different process
involved with the activities like payments and treasury processes. The pandemic of covid 19
has impacted the market to a huge extend and made it very unpredictable and unstable. The
pandemic has increased the risks of liquidity conditions and foreign exchange but they have
also created new dimensions like cybercrime as the nature of work shifted to work-from-
home. This drastic change in the style of work from working in an office to a remote location
from everyone’s home has increased the digital loophole which created a high risk of data
breach for an organization.
Challenges faced due to Covid-19 Pandemic

The COVID-19 emergency hazards making significant misfortunes in financing for

manageable turn of events. Homegrown asset preparation will endure as financial
movement is diminished. Inflows of outside private money are projected to drop by
USD 700 billion contrasted with 2019 levels, surpassing the effect of the 2008 Global
Financial Crisis by 60%. Financial space is probably going to limit further with increasing
homegrown spending and swapping scale developments against the USD.
In the present moment, official advancement money ought to be utilized to contain
the drop in different wellsprings of financing. Currently scant assets combined with
the monetary effect of the emergency infer that creating economies may battle to
fund satisfactory general wellbeing and social and financial reactions. No single source
of financing will be sufficient to close the COVID-19 financing gap.

In the medium-term, entertainers being developed money and past need to team up
near "form back better" for a more evenhanded, supportable, and subsequently
tough world. Being developed money, while homegrown asset preparation will stay
the main long haul reasonable wellspring of financing for some open labor and
products, working back better will require activity from all financing sources with the
shared objective to help public practical advancement procedures. Past improvement
finance, there is, for example, a need to renew exchange and, on account of little
island creating states, advance a maintainable sea economy.
 “But those businesses that
succeed in navigating COVID-19
will be keen to ensure that their
plans for a return to growth will
be sustainable against the threat
of climate change.”

The COVID-19 crisis is hitting

developing economies at a critical
moment
 Preceding the emergency, financing had as of
now missed the mark concerning the
spending needs to accomplish the SDGs by
2030, and monetary space was restricted by
rising public obligation levels and servicing
costs.

The COVID-19 crisis risks creating

major setbacks in financing for
sustainable development.
Domestic resource mobilization
will suffer as economic activity is
reduced.
Inflows of external private money are projected
to drop by USD 700 billion contrasted with 2019
levels, surpassing the effect of the 2008 Global
Financial Crisis by 60%.
Major sectors impacted includes:
Banks and capital markets
The regulatory global financial crisis after 2008 put the banks in a good starting
position for the COVID19 pandemic. Compared to banks, households and companies
entered the crisis with a relatively high level of leverage and are therefore more
susceptible to economic shocks.

Insurance
The insurance industry is by nature well prepared for major loss events in the industry
such as the COVID19 pandemic in general. Several insurers have learned from the 2003
SARS outbreak and introduced communicable disease and epidemic / pandemic
exclusion clauses to most non-life products such as business interruption and travel
insurance.

Asset Management
The industry has seen the combined effects of massive asset outflows as investors
focused on liquidity and lower asset valuations undermined the flow of management
fees. Certain funds have struggled to handle investor repayments.
Major Impacts from the Business Risks:
While the current situation brings great challenges with it, the focus is relatively
narrow in the short term and the treasurers are looking for measures to keep
their own operations running.
But these measures are likely to be just the beginning of the profession's
response to the crisis that is currently threatening the viability of entire
industries.
Short-term effects
Treasurers are of course already faced with the challenge of the short-term
effects of the pandemic. Immediate concerns include areas such as:
• Business Impact: Impact on customer demand, supply chains, and working
capital.
• Liquidity: Treasurers assess that they have sufficient on-demand facilities and
cash to meet anticipated business needs and assess whether additional
emergency facilities are required.
• Operations: Treasury workers who work from home must be able to remotely
access treasury management systems (TMS) and banking services while applying
the necessary controls to reduce the risk of cyberattacks and bank fraud to
reduce.
Long-Term Impact
With the potential for the pandemic to last six months or more and already
sparking a global recession, treasurers must also consider the long-term impact
on their businesses.
Weighing Existing Priorities
Lastly, in the coming weeks, the treasurers will examine how the current crisis
will affect other activities that are likely to be the focus of attention in 2020,
such as the transition from the Libor rate benchmarks and Brexit preparations.
How treasurer deal with these challenges: To mitigate
these risk or challenges, treasurers use a treasury risk
management strategy.
• To deal with foreign exchange volatility, treasurer need to evaluate current
treasury policies which are in sync with currency volatility. If a company wants
its business to continue operating efficiently then they need to understand the
current market conditions and re-evaluate their policies in a better manner.

• To mitigate the cyber risk, treasurer use cloud-based treasury system which
help them to remove the challenges posed by the transition to remote work. A
cloud-based approach helps the treasury department in such a way that a user
can run a workflow from anywhere, they have the access to treasury system
operations without having any physical appearance in the office. This provides
flexibility to implement business processes seamlessly.

• To deal with liquidity risk and cash flow challenges, treasurer use automated
approach to controlled the potential threats to liquidity. Liquidity can be more
effectively managed by utilizing a standardized treasury payments approach.
This also enhance the accuracy and approach to fight against fraud and
cybercrime more efficiently.

• In a volatile market condition, there is risk of raising funds or issuance of debt,

as organizations that require access to debt market may find the markets closed
for extended periods. But they can mitigate that risk also by analyzing the given
history of debt capital market and then accordingly plan their re-financing
requirements and liquidity facilities.

• To deal with operational risk, many treasurers want to work from home as an
immediate requirement to deal with the current situation. Treasuries will have
been taking strides to ensure that they have the necessary processes in place
Conclusion
Covid-19 has affected all sectors across the world negatively. This pandemic has
put treasurers in a tough position. As a judicious measure, corporate treasurers
should observe market measures, which may provide signs of diminishing
strength of finance to maintain key relationship with banks. Treasurers can look
for a widening credit spreads or in credit-default swaps to averse this kind of
situation. They should back on their strength and look for the volatility in the
market. Here, adaptability plays a huge role. The companies and banks which can
adapt to this pandemic in a well manner and look for new opportunities to
transform their method of managing the department of treasury will face less risk
of loss.