Foreign Currency Payments

Departments occasionally need to make large foreign currency payments, which are usually translated to Canadian dollars at the FMS exchange rate on the date of payment. 

The FMS rate is based on the previous day’s Bank of Canada noon rate and is therefore variable. In certain circumstances, departments may negotiate with Treasury to fix exchange rates for specific expenditures or collection in advance, in order to achieve budgetary certainty. 

Any such agreement to lock-in rates will be:

  • available only when Treasury have the foreign currency to ‘sell’ or 'buy' to and from the department
  • applicable to all purchases/collection under the arrangement for the duration of the agreement
  • locked-in rate is a firm commitment and cannot be changed except with the pre-authorization of Treasury
  • managed and administered by the department requesting the locked-in rate.

Locked-in Rates Availability

There are three scenarios in which locked-in rates are available by agreement with Treasury:

Purchase Orders > $65,000 CAD

A fixed rate may be applied to all purchases made in connection with a PO valued over $65,000 CAD. The department should contact Treasury with:

  • a copy of the PO confirming contracted value and currency
  • the expected payment dates to fulfill the contract
  • the PG to be charged
  • the contact information for the PG owner.

Treasury will email an exchange rate contract to the PG owner. The PG owner must confirm acceptance by return email before the deadline. Once PG owner accepted the contract and notified Treasury by email, Treasury will prepare a written confirmation and send it to the department for signature. ​

Non-Purchase Order Purchases > $65,000 CAD

A department that makes regular, large, non-PO purchases may also request to fix foreign exchange rates. Rates may be locked in for up to 12 months. The interested department should contact Treasury with:

  • a forecast of the expected payments broken down by date/month
  • the PG to be charged
  • the contact information for the PG owner
  • the contact information for an individual in the department who will be responsible for:
    • making the foreign currency payment as per the forecast payment schedule
    • preparing a Journal Voucher per the forecast payment schedle to record the exchange difference between the fixed exchange rate and the actual rate in FMS for Treasury approval. 
Grant Funding Received in US dollars

Where grants are received in US dollars and disbursements will also be made in US dollars (we assume that there would be a mix a US$ and CAD$ disbursements), the PG owner may want to eliminate the impact of exchange gains and losses on the PG budget by locking in the rate for both incoming and outgoing foreign currency. 

Alternatively, the granting agency may have specified a treatment of foreign currency. In these situations the department should contact Treasury prior to receipt of the funds with the following:

  • a forecast schedule of the expected collection and payments broken down by date/month
  • the PG to be charged
  • the contact information for the PG owner 
  • the contact information for an individual in the department who will be responsible for:
    • tracking payments
    • preparing a Journal Voucher per the forecats schedule of payment for Treasury approval

Once the rate is locked and has an impact on compliance and financial reporting, notify Research Finance (RF) about the Treasury approval to apply the incoming foreign exchange rate to the appropriate US$ disbursements (as forecasted) at the end of each month. RF will apply to the extent of US$ available in the PG, making sure that there would be no resulting cash deficit.

When the locked-in rate is just to eliminate gains and losses, notify Financial Operations of the arrangements between Treasury and PI/department to override the FMS exchange rate when disbursements are processed. The department should check the PG ledger to determine the exchange rate used by Revenue Accounting for US$ wire payments and RF US$ cheque deposits.

For more information, contact UBC Treasury:

Otto Wong
Finance Analyst
Tel: 604-822-4090