Foreign Exchange

The Australian Government's foreign exchange risk management policy has been in place since 1 July 2002. This policy applies to all entities in the general government sector (GGS). The GGS is comprised of Financial Management and Accountability Act 1997 (FMA Act) agencies and GGS Commonwealth Authorities and Companies Act 1997 (CAC Act) bodies. The policy applies to both departmental and administered funding.
Foreign exchange risk is the risk that an entity's financial performance or position will be affected by fluctuations in the exchange rate between the Australian dollar and other currencies.
The overarching principle of the policy is that GGS entities are responsible for the management of their foreign exchange risks. However, they will not act to reduce the foreign exchange risk that they would otherwise face in the course of their business arrangements.
To assist GGS entities in managing foreign exchange risk, the Department of Finance and Administration (Finance) has published the Australian Government Foreign Exchange Risk Management Guidelines, which provide in-principle guidance to entities, and may also be used as a benchmark to assess entities' foreign exchange risk management practices.
The Agency Banking Framework – Guidance Manual outlines the service requirements for foreign exchange transactions. This includes the payment and receipt of foreign currency, arrangements for the delivery and purchase of foreign currency through external providers and the adjustments needed to standing arrangements or thresholds.