The Reserve Bank has models that are able to explain a good proportion of cyclical fluctuations in the exchange rate.3 These models typically highlight the correlation between the exchange rate and a few key variables, such as the terms of trade, interest rate differentials, relative house price inflation, and measures of risk.
Because of the nature and levels of risks inherent to their business activities, complex banking organizations should have in place a compliance-risk management framework that makes it possible to identify, monitor, and effectively control the compliance risks facing their entire organization. Of course, such a framework needs to be commensurate with the nature and level of the organization's compliance risk.