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  • Calculation of the Net Open Position in a Single Currency

    • CA-5.5.10

      An Islamic bank licensee's exposure to foreign exchange risk in any currency is its net open position in that currency, which is calculated by summing the following items:

      (a) The net spot position in the concerned currency (i.e. all assets items less all liability items, including accrued profit, other income and expenses, denominated in the currency in question; assets are included gross of provisions for bad and doubtful debts, except in cases where the provisions are maintained in the same currency as the underlying assets);
      (b) The net position of a binding unilateral promise by the Islamic bank licensee to buy and/or sell the concerned currency on a specified future date (that are not included in the spot open position);
      (c) Guarantees and similar off-balance sheet contingent items that are certain to be called and are likely to be irrecoverable where the provisions, if any, are not maintained in the same currency;
      (d) Profits (i.e. the net value of income and expense accounts) held in the currency in question; and
      (e) Specific provisions held in the currency in question where the underlying asset is in a different currency, net of assets held in the currency in question where a specific provision is held in a different currency.
      January 2015

    • CA-5.5.11

      For calculating the net open position in gold or silver, the Islamic bank licensee must first express the net position (spot plus forward) in terms of the standard unit of measurement (i.e. ounces or grams) and then convert it at the current spot rate into the reporting or base currency.

      January 2015

    • CA-5.5.12

      Where gold or silver are part of a forward contract (i.e. quantity of gold or silver to be received or to be delivered), any foreign currency exposure from the other leg of the contract must be reported.

      January 2015