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Market Risk


Market Risk Department aims to ensure compliance of the CBE concerned departments/sectors with the parameters and procedures approved by the CBE's Investment Committee. The Department's main activities are to decide potential risks through advanced financial analysis tools and to develop a plan of corrective actions to mitigate those risks, in order to minimize any potential losses or costs resulting from movements in the global or local markets and to maintain the level of foreign exchange reserves.

The Department identifies, evaluates and measures the global and local market volatility risks resulting from the negative movements in the value of financial instruments resulting from changes in interest rates, foreign exchange rates, commodities, stocks and other securities. This is achieved through following up and monitoring all factors affecting foreign exchange reserves to measure any potential risks, in order to mitigate them and minimise their negative effects through ensuring all trades are within the limits and levels approved by the CBE's Investment Committee and BOD and applied on all CBE investment transactions. This allows mitigation of risks associated with investment transactions and operations in various fields. The Department also shares with its technical opinion to investment policies approved by the CBE's BOD.

Market risks are closely related with the CBE's Reserve Management Department, responsible for the CBE's trading activities; the Back Office Department, responsible for settlement and claims operations; and the External Debt Department, responsible for all external agreements.

The performance of the CBE's investment portfolios is monitored according to the latest international analysis methods; mainly the VaR and Duration methods; and also monitoring compliance with approved credit limits and investment guidelines.

The CBE adopts conservative investment guidelines, investing only in high-quality, low-risk financial instruments that must be rated by at least two rating agencies from the three big international rating agencies.