Exchange Rates

Mr. Hague
To ask the Secretary of State for Foreign and Commonwealth Affairs what steps will be taken to manage his Department's exposure to foreign currency movements when his Department's contract with the Bank of England to buy 80 per cent. of net US dollar and euro exposure ends.

David Miliband
To date the Foreign and Commonwealth Office has secured several contracts with the Bank of England which provide the full cover allowed for our forecast US dollar and euro net exposure up to February 2010, and partial cover over the intervening months to January 2011. HM Treasury have limited the amount of cover we can purchase to a maximum of 80 per cent. of our net foreign exchange exposure at overseas posts, but up to 100 per cent. for known commitments to international organisations.

Each month a further contract is secured with the Bank of England, to extend full cover and partial cover an additional month. Thus the March 2010 contract will secure full cover for March 2010 and partial cover over the intervening months to February 2011.

Contracts have also been secured for Japanese yen that currently extend to March 2010. Additional contracts will be purchased in due course.