Foreign Exchange Risk Management Guidelines

Exposure Analysis

An Exposure can be defined as a Contracted, Projected or Contingent Cash Flow whose magnitude is not certain at the moment. The magnitude depends on the value of variables such as Foreign Exchange rates and Interest rates.

The company will determine and analyse its Foreign Exchange exposures.

The Colour of Money - Ongoing issues in Risk Management

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Determination:
The following cash flows/ transactions will be considered for the purpose of exposure management.

Variable / Cash Flows	Transaction Type
Contracted Foreign Currency Cash Flows Foreign Interest Rates, whether Floating or Fixed Cash Flows from Hedge Transactions Projected/ Contingent Cash Flows	Both Capital and Revenue in nature All Interest Payments/ Receipts All Open hedge transactions Both Capital and Revenue in nature

Cash Flows above $100,000/- in value will be brought to the notice of the Exposure Manager, as soon as they are projected.
It is the responsibility of the Exposure Manager to ensure that he receives the requisite information on exposures from various sections of the company in time.

Analysis
These exposures will be analysed and the following aspects will be studied:

Foreign Currency Cash Flows/ Schedules
Variability of Cashflows - how certain are the amounts and/ or value dates?
Inflow-Outflow Mismatches / Gaps
Time Mismatches / Gaps
Currency Portfolio Mix
Floating / Fixed Interest Rate ratio