Regulatory Alerts2015-07-21 | 243517628Banking Circular No 9 of 2015 - Compliance with the Prudential Guideline on Foreign Exchange Exposure Limits - CBK-PG-06
The Central Bank of Kenya's Prudential Guideline on Foreign Exchange Exposure Limits sets a 10% cap on overall foreign exchange exposure relative to an institution's core capital. This circular reiterates the need for institutions to comply with this guideline and clarifies that intraday foreign exchange limits should not surpass the 10% overall limit at any point during the day.
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.
- 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