Below is an example of calculating the capital charge for FX risk.

A bank has the following positions that have been converted at spot rates into its reporting currency, United Arab dirhams (AED).

The higher of the sum of the net long and net short currency positions is AED 300m.

The capital charge is therefore calculated as 8% of AED 300m, plus the net position in gold (AED 35m):

Capital charge = 8% of AED 335m = AED 26.8m

Another example;

A bank has the following positions that have been converted at spot rates into its reporting currency (AED)

The sum of the net long positions is AED 225m and the sum of the net short positions is -AED 145m. The capital charge is calculated as 8% of the higher of these two positions, so the charge is 8% of AED 225m, or AED 18m.