What is trapped cash?
Trapped cash is money a business holds in a country but cannot convert to hard currency or move abroad, usually because of foreign-exchange controls or shortages. The cash exists on the balance sheet but is functionally immobile — stuck behind an allocation queue, a remittance cap, or a thin correspondent-banking network.
A company may book healthy local-currency profits or receivables yet be unable to repatriate them, pay an offshore supplier, or convert them before devaluation erodes their value. The risk compounds in devaluing currencies, where waiting to convert is itself a loss.
Compliant settlement rails that don't depend on the local allocation queue are one way businesses reduce trapped-cash exposure — clearing the dollar leg offshore while staying inside exchange-control rules.