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Guidelines for the Management of Crown and Departmental Foreign Exchange Exposure

3.  Accountabilities and Responsibilities

Guideline 3

The policy document must list the delegated authorities and key responsibilities for foreign-exchange exposure management within the department.

Policy

  1. Chief Executives are accountable for their department’s foreign-exchange exposure management. This includes:

    • designing and implementing their department’s foreign-exchange policy document;

    • identifying and covering their transaction exposure, with approved instruments and counterparties;

    • managing the funding and operation of their foreign-currency bank accounts;

    • monitoring credit and transaction exposure limits; and

    • reporting on all aspects of foreign-exchange exposure as part of their normal financial reporting.

  2. Pursuant to section 41 of the State Sector Act 1988, the Chief Executive may delegate any combination of the above responsibilities without limiting his/her responsibility.

  3. In the case of extraordinary exposures related to transactions which fall outside the normal course of business (eg, the acquisition of major capital assets), the Minister of Finance may recommend to Cabinet that the associated foreign-currency transaction(s) be managed by the NZDMO (refer to Schedule II for the role of the NZDMO).

  4. Treasury is responsible for:

    • issuing guidelines for the management of Crown and departmental foreign-exchange exposure;

    • approving departments’ foreign-exchange policy documents;

    • approving the opening of Crown and departmental bank accounts and any changes to them thereafter;

    • issuing directions regarding the terms and conditions under which bank accounts may operate;

    • executing foreign-exchange transactions on behalf of departments, where requested by the department; and

    • providing advice to departments (typically at an operational level) on how to manage their transaction exposure.

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