The budget paid in foreign currency including the general and special account, has reached over 4.2 billion dollars. With regard to the Ministry, Defense acquisition program administration occupies 49.2 percent of total foreign exchange budget, fol-lowed by 24.3 percent for Ministry of National Defense and 18.2 percent of Ministry of Foreign Affairs and Trade. Categorized by the usage, payment for asset acquisi-tion reveals the highest portion in Defense acquisition program administration. Payment for operation and Human Resource takes significant position in last two ministries.
Foreign exchange risk can be defined as the difference between budget exchange rate and settlement rate. In other words, higher settlement rate than budget ex-change rate can squeeze the budget so that downsizes scale of business. If impossi-ble, insufficient budget was made up for the budget shifting. On the other hands, budget surplus occurs when settlement rate is lower than budget exchange rate. As shift in budget surplus has been pointed out, we are now discussing the counter-measures.
Australia is coping with foreign exchange risk of budget in the active manner, by means of legislating “Australian Government Foreign Exchange Risk Manage-ment Guideline.” Australian government pursues “No win No loss” strategy which tight budget was supplemented or budget surplus was confiscated through budget adjustment process. Because Australian government prohibits all transactions to hedge foreign exchange credit despite of allowing authorities to aware and measure, monitor the risk.
New Zealand legislated “Guidelines for the Management of Crown and Depart-mental Foreign-Exchange Exposure” in March 1990. Unlike Australia, New Zea-land government sat the limit NZD 100,000 to the foreign exchange exposure. As for the exceeding amounts, the hedge was obliged by spot exchange and forward exchange.
Foreign exchange risk caused by foreign exchange budget, it is desirable to re-turn budget surplus or retain shortage rather than launching financial derivatives. Because all regulations are insufficient, which include effect on foreign exchange market and cost caused by financial derivatives, organization and evaluation of for-eign exchange risk.
It should be considered to organize the group in charge of managing foreign exchange risk in the mid-long term. While strategy to return or retain the budget by exchange rate fluctuation would be effective in short term, it is essential to organize the group in charge or prepare related guideline in terms of measuring and analyz-ing the risk. This will help large project which requires spending great amount of foreign currency in order to respond the risk with the reasonable manner.
Deliberating budget as a result of exchange rate fluctuation should be rein-forced. Thorough deliberation on budget exchange rate from Ministry of Strategy and Finance is required during the budget deliberation process at National Assem-bly. If there are changes in project results and contents submitted at the time of settlement, National Assembly investigates the legality. Since budget surplus which rose from decreasing exchange rate leads to consume up allotted budget by increas-ing number of project.
Foreign exchange risk can be defined as the difference between budget exchange rate and settlement rate. In other words, higher settlement rate than budget ex-change rate can squeeze the budget so that downsizes scale of business. If impossi-ble, insufficient budget was made up for the budget shifting. On the other hands, budget surplus occurs when settlement rate is lower than budget exchange rate. As shift in budget surplus has been pointed out, we are now discussing the counter-measures.
Australia is coping with foreign exchange risk of budget in the active manner, by means of legislating “Australian Government Foreign Exchange Risk Manage-ment Guideline.” Australian government pursues “No win No loss” strategy which tight budget was supplemented or budget surplus was confiscated through budget adjustment process. Because Australian government prohibits all transactions to hedge foreign exchange credit despite of allowing authorities to aware and measure, monitor the risk.
New Zealand legislated “Guidelines for the Management of Crown and Depart-mental Foreign-Exchange Exposure” in March 1990. Unlike Australia, New Zea-land government sat the limit NZD 100,000 to the foreign exchange exposure. As for the exceeding amounts, the hedge was obliged by spot exchange and forward exchange.
Foreign exchange risk caused by foreign exchange budget, it is desirable to re-turn budget surplus or retain shortage rather than launching financial derivatives. Because all regulations are insufficient, which include effect on foreign exchange market and cost caused by financial derivatives, organization and evaluation of for-eign exchange risk.
It should be considered to organize the group in charge of managing foreign exchange risk in the mid-long term. While strategy to return or retain the budget by exchange rate fluctuation would be effective in short term, it is essential to organize the group in charge or prepare related guideline in terms of measuring and analyz-ing the risk. This will help large project which requires spending great amount of foreign currency in order to respond the risk with the reasonable manner.
Deliberating budget as a result of exchange rate fluctuation should be rein-forced. Thorough deliberation on budget exchange rate from Ministry of Strategy and Finance is required during the budget deliberation process at National Assem-bly. If there are changes in project results and contents submitted at the time of settlement, National Assembly investigates the legality. Since budget surplus which rose from decreasing exchange rate leads to consume up allotted budget by increas-ing number of project.