Financial Risk Manager

Ways of Financial and Risk Management

State Bank of Pakistan has issued a circlular regards Foreign Exchange Exposure Limit mentioning following:

Aggregate Foreign Exchange Exposure Limit (FEEL) of Authorised Dealers (ADs) was set as 15% of their Paid-up Capital with a maximum cap of PKR 1,500 million.
To adjust the FEEL of ADs according to the changed market conditions & trade volumes, it has been decided that, effective from June 15th, 2009, the FEEL of ADs would now be calculated as 20% of their Paid-up Capital (free of losses) with a maximum cap of PKR 2,000 million.
However, SBP reserves the right to assign the FEEL of any AD below 20% of Paid-up capital (free of losses), based on the trends observed in the utilization of FEEL.
The FEEL of ADs would now be reviewed annually on the basis of annual audited accounts each year and any changes will be advised to each AD individually through separate letter.
In the case of banks incorporated in Pakistan the limit would cover all the branches including overseas branches if any, as already advised vide FSCD Circular No 06 referenced above.
The assigned FEEL should be meticulously adhered to and any breaches would attract penal actions,as deemed appropriate.