Banking Circular No 9 of 2015 - Compliance with the Prudential Guideline on Foreign Exchange Exposure Limits - CBK-PG-06

BANKI
KUU YA
BANK OF
KENYA
KENYA
Haile Selassie Avenue P.O. Box 60000-00200 Nairobi. Kenya Telephone: 2860000. Fax: 340192 21st July, 2015 BANKING CIRCULAR NO. 9 OF 2015 CHIEF TO:
EXECUTIVES OF COMMERCIAL BANKS, NON-BANK
FINANCIAL INSTITUTIONS AND MORTGAGE FINANCE COMPANIES COMPLIANCE WITH THE PRUDENTIAL GUIDELINE ON FOREIGN EXCHANGE EXPOSURE LIMITS-CBK/PG/06 The Central Bank of Kenya (CBK) Prudential Guideline on Foreign Exchange Exposure Limits sets out the limit on overall foreign exchange exposure as measured using spot midrates and the shorthand method as 10 percent of an institutions' core capital. Further, the Guideline indicates that intra-day foreign exchange risk exposures should also be maintained within prudent limits as established by a bank's board of directors in a written policy covering foreign exchange risk exposure.

The purpose of this circular is to:
l. Reiterate that institutions should be compliant at all times with the Prudential Guideline on Foreign Exchange Exposure Limits.

2. Clarify that the intraday foreign exchange limits should not exceed the 10 percent overall limit at any time during the day.

MATU MUGO ASSISTANT DIRECTOR, BANK SUPERVISION C.C.

Habil Olaka Chief Executive Officer Kenya Bankers Association International House NAIROBI Matu