Over the past few years, a number of international banks have started offering products that enable their clients make cross-currency payments from a single currency nostro. The core theme of these products is to execute foreign exchange FX in the payment and deliver local currency to the destination -- enabling a value transfer from the beneficiary bank which would have executed the FX to the remitting bank which actually does.
While lifting fees are worth about $10 to $15 per transaction, executing the FX in a payment can raise the yield to about $75 to $100. The economics of such an “FX conversion” type product are attractive, but the...
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