Discuss Foreign Exchange Management

Discuss Foreign Exchange Management

Foreign Exchange Management:

Foreign Exchange Risk Management

Foreign exchange risk is defined as the potential change in earnings arising in market prices .The market directly affects each country ‘s bond ,equities, private property, manufacturing, and all assets that are available to foreign investors. Foreign exchange rate also play a vital role in determining who finances government deficits, which buys equities in companies and literally affects and influences the economic scenario.

Due  to high risk market the role of treasury operations is crucial .As per Bangladesh Bank ‘s guidelines the bank has segregated the front and back office of treasury operations.

Front office independently conducts transactions and the office is responsible for verification of the deals and the passing of their entries in the books of accounts. All NOSTRO accounts are reconciled on monthly basis and all foreign exchange transactions are revalued at market to market rate as determined by Bangladesh Bank.

Foreign Currencies Translation :

Foreign currencies translations are converted into equivalent taka using the ruling exchange rate on the date of transactions. Foreign  currencies balances held in US dollar at the year end are translated into taka currency at the weighted average rate of inter bank market as determined by Bangladesh Bank. Balances held in foreign currencies other than US dollar are converted into mid vale of the selling and buying rate of the last transaction date of the year of the bank.