Foreign Exchange Risk Policy
Section 1 - Executive Summary
(1) The
Section 2 - Purpose
(2) The purpose of this Policy is to establish how the
(3) This Policy should be read in conjunction with the Foreign Exchange Risk Procedure.
Top of PageSection 3 - Scope
(4) This Policy applies to foreign currency transactions conducted on behalf of the
Section 4 - Audience
(5) This Policy should be read and understood by
Section 5 - Definitions
(6) In the context of this document:
Defined Term | Meaning |
---|---|
Foreign Currency | Any currency other than $AUD. |
Foreign Currency Risk | The |
Foreign Currency Account | A bank account holding a foreign currency, held by the |
Foreign Currency Movement | The change in the foreign currency amount between one point (i.e. budget or contract agreement) and the time a related transaction is finalised. |
Hedge | A method of |
Hedging Contract | A binding transaction that aims to limit exposure in movements in exchange rates. |
Section 6 - Foreign Exchange Transaction Exposure
(7) The primary sources of foreign exchange exposures are:
- foreign currency income associated with
research grants,student tuition fees, and philanthropic grants; - foreign currency expenditure associated with
research grants; - general capital and operational expenditure denominated in foreign currency; and
- expenditure associated with subscriptions and publications of the
University library.
Management of the Risk
(8) To reduce foreign exchange exposure the
(9) Where it is not practical to have contracts agreed to in Australian dollars, foreign currency
- currency accounts; or
- derivatives.
(10) Financial Services are responsible for managing the net foreign currency exposures using the requirements prescribed in the Foreign Exchange Risk Procedure. All other business units are prohibited from entering into hedging contracts.
Currency Accounts
(11) Where a foreign currency account is held by the
(12) Where the required foreign currency amount exceeds the currency held, the
Derivatives
(13) The
(14) All foreign currency hedging transactions must occur with one of the major Australian banks.
(15) The total value of foreign currency hedging contract transactions will not exceed the limits applied by Council. All derivative transactions must be approved as required by Section 16 of the Finance Committee Charter, Chancellor’s Committee Charter, and Delegations of Authority. Where the circumstances warrant, based on
(16) All hedging transactions are to be reported to Finance & Infrastructure Committee by the Chief Financial Officer within the Financial Services Report.
Procedures and Control
(17) The Foreign Exchange Risk Procedure outlines the approval process required for foreign currency transactions, hedge transactions and the management of foreign currency accounts.
Top of PageSection 7 - Related Documents
(18) Australian Accounting Standard (AASB) 139 Financial Instruments: Recognition and Measurement