Risk Management
Article Index
Risk Management
Operational Risk
Credit Risk Management
Market Risk Management
Foreign Exchange Risk Management
Liquidity Risk Management
Supervisory Review

Foreign Exchange Risk Management

Foreign Exchange rate risk arises from exchange rate movements which affect the profit of the bank from its foreign exchange open positions. Because of bank’s exposure to foreign currency, foreign exchange risk management is a fundamental component in market risk management of the bank. It involves prudent management of foreign currency positions in order to control, within set parameters, the impact of changes in exchange rates on the financial position of the Bank. The frequency and direction of rate changes, the extent of the foreign currency exposure and the ability of counterparties to honor their obligations to the Bank are significant factors in foreign exchange risk management. This risk is managed by setting pre-determined limits on open foreign positions, the monitoring of the open positions against these limits and the setting and monitoring of our stoploss mechanism. In order to manage the foreign exchange risk and protect the bank’s financial position, the bank follows following procedures:

  • Establish and implement sound and prudent foreign exchange risk management policies.
  • Develop and implement appropriate and effective foreign exchange risk management and control procedures.


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