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Nostro Balance Requirement Calculator

Work out nostro balance requirement instantly with clear inputs, formula shown and shareable results.

About Nostro Balance Requirement Calculator

A nostro account funds settlement in a foreign currency, so it must cover the settlement cycle plus a buffer for timing mismatches. Those balances earn little, which is why the carry cost is a genuine treasury expense.

Formula

Nostro requirement

Required = daily outflow × settlement days × (1 + buffer)

Worked example

With the default values below, Nostro Balance Requirement Calculator returns Nostro Balance To Maintain of $12,500,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Average Daily Settlement Outflowminimum 0
5,000,000
Settlement Cycle In Daysaccepts 1–10
2
Safety Bufferaccepts 0–100 %
25 %
Opportunity Cost Of Idle Fundsaccepts 0–20 %
5 %

Results

Nostro Balance To Maintain
$12,500,000.00
Settlement Cycle Requirement
$10,000,000.00
Safety Buffer
$2,500,000.00
Annual Cost Of Holding It
$625,000.00

Step by step

  1. 1Values used
  2. 2Nostro requirement
  3. 3Nostro Balance To Maintain= 12,500,000.00
  4. 4Settlement Cycle Requirement= 10,000,000.00
  5. 5Safety Buffer= 2,500,000.00
  6. 6Annual Cost Of Holding It= 625,000.00

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

Frequently Asked Questions

Why not hold a larger buffer?

Idle foreign balances earn poor returns and consume balance sheet, so treasury minimises them subject to settlement risk.

What happens if the balance is short?

Payments fail or attract overdraft charges from the correspondent, both of which are expensive and reputationally damaging.

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