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Foreign Exchange Risk Management: P. Vasudevan, Mof
Foreign Exchange Risk Management: P. Vasudevan, Mof
P. Vasudevan, MoF
14/12/2006
Bankers Training College
• Activities at branches
• Communication delays
• Wrong / Delayed / Non-reporting of
transactions
• Forged TCs, currency
• Lack of skilled personnel; specialisation
• Audit / Inspection of dealing room – expertise
needed
• Regulatory / Legal compliance / implications
Bankers Training College
Types of Exposures
• Currency Exposures
• Risk universe
• Transaction Exposures
• Impacts P&L
• Translation Exposures
• Hedging policy
• Affects B/S
• Economic Exposures
• Direct
• Indirect
• Aids long term planning
Bankers Training College
Transaction Exposures
Translation Exposures
Economic Exposures
• Risk Avoidance
• Risk Hedging
• Risk Acceptance
• Risk Management
Bankers Training College
Hedging
Types of Risks
• Position Risk
• Gap Risk
• Exposure Risk
• Settlement Risk
• Country Risk
• Liquidity Risk
• Technology Risk &
• Operational Risk
Bankers Training College
Position Risk
Preventive Controls
Risk Measurement
Shorthand Method
Gap Risk
Exposure Risks
Settlement Risk
Country Risk
Liquidity Risk
Operational Risk
Reconciliation
Any Questions ??
Bankers Training College
Thank you