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The Risks in Forex Trading in Commercial Banks in Pakistan

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  • Saima, Saima

Abstract

This study aims at identifying the risks and mitigating steps for reducing these risks under the broad heads where the Commercial banks today deal. If the banks will not take calculated risk and steps, they will end up loosing the whole investment and a huge loss can also result in default of a bank and lose of general public’s trust on the party. Today the competition has increased in the banking sectors and in the future only those banks will survive in the market that can understand the risk and have good strategies to handle the risks and offer the desired services to the customers. It is hoped that readers will find this report useful and that it will contribute not only in the development of financial sector of Pakistan but even more so to better decision- making. Afghan war negatively affected Pakistan because export orders from Pakistan were cancelled, foreign currency inflows were hit, AID from International Donor Agencies. In addition to this there was rescheduling of various International Loans. A positive impact of Afghan war was opening of new avenues for reconstruction in war hit and damaged Afghanistan. Banks follows the risk assessment framework of State Bank of Pakistan. It is very helpful for banks for assessing the risk in their operation and activities. The rapidly changing financial scenario has forced regulators to recognize the importance of changing the risk profile of banks. With Banks implementing risk mitigating steps properly and State Bank exercising full vigilance and control, banks are to the maximum extent safeguarded. In this report efforts have been made to highlight the major risks encountered by the commercial banks in Pakistan and the mitigating steps that banks take and therefore hedge themselves. State Bank of Pakistan and the government also plays an important role in this regard.

Suggested Citation

  • Saima, Saima, 2022. "The Risks in Forex Trading in Commercial Banks in Pakistan," MPRA Paper 116509, University Library of Munich, Germany, revised 18 Dec 2022.
    • Handle: RePEc:pra:mprapa:116509
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    References listed on IDEAS

    as
    1. Hussain, Zahir & Ali, Syed Babar, 2009. "Implementation of Operational Risk Regime: A Case of Commercial Banks in Pakistan," MPRA Paper 64469, University Library of Munich, Germany.
    2. Syed Babar Ali & Manzoor A.Khalidi, 2020. "Valuation of Equity Securities, Private Firms, and Startups," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 16(1), pages 125-140.
    3. Zia Ullah & Mohammed Ali Bait Ali Sulaiman & Syed Babar Ali & Naveed Ahmad & Miklas Scholz & Heesup Han, 2021. "The Effect of Work Safety on Organizational Social Sustainability Improvement in the Healthcare Sector: The Case of a Public Sector Hospital in Pakistan," IJERPH, MDPI, vol. 18(12), pages 1-18, June.
    4. Rizvi, Aoun & Ali, Syed Babar, 2011. "Risk Taking Behavior of Investors of Pakistan," MPRA Paper 64342, University Library of Munich, Germany.
    5. Ahmad, Baseer & Ali, Syed Babar, 2012. "Do Individual Investors in Pakistan Prefer Dividends?," MPRA Paper 64205, University Library of Munich, Germany.
    6. Ali, Syed Babar, 2012. "Corporate Governance and Accounting Practices in Pakistan," MPRA Paper 64713, University Library of Munich, Germany.
    7. Ali Zaidi, Syed Najaf & Ali, Syed Babar, 2006. "Risk and Scope of Debit Check Card in Competitive Market of Pakistan," MPRA Paper 64456, University Library of Munich, Germany.
    8. Syed Babar Ali & Manzoor A.Khalidi, 2020. "Valuation of Equity Securities, Private Firms, and Startups," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 16(1), pages 16-19.
    9. Ali, Madiha & Ali, Syed Babar, 2014. "The Impact of Working Capital Management on Firm Profitability and Fixed Investment in Pakistan," MPRA Paper 64520, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Forex Trading;

    JEL classification:

    • G0 - Financial Economics - - General

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