GAD supported UKSA with analysis of currency exchange data to
help UKSA protect public funds by managing its euro payments to
the European Space Agency.
We helped the UK Space Agency (UKSA) with its understanding of
financial risk – helping protect public funds while enabling the
UK's space ambitions.
The Government Actuary's Department (GAD) undertook an analysis
to help the UKSA understand the impact of currency values on
payments it has to make in euros. This analysis was used to
inform UKSA's exposure to risk of currency fluctuations, and how
it can manage those risks.
Hedging strategies
UKSA invests and makes regular payments in euros to the European
Space Agency (ESA). Meanwhile, funding for the UKSA from its
sponsor department the Department for Science, Innovation and
Technology is in pounds sterling.
We used historical currency exchange rate data to help illustrate
risks when needing to make payments in another currency. We
considered the impact that different currency hedging strategies
can have, by locking in exchange rates in advance, as a tool to
manage risk.
Support policy decisions
The government is used to transacting in overseas currencies and
our analysis will be used to support policy decisions in how UKSA
makes payments to the ESA.
Investment Consultant Timea Varga said: “This analysis was a
great example of applying actuarial techniques to help
understanding of financial risks. My background is in investment
management; I was proud to be able to apply that experience to
help inform policy and drive value for the public sector.”
