In your current account agreement with your bank, you specifically agree that if the funds are not 100% in your account, and something happens, your bank can reverse the transaction.
It is for this reason that we always tell clients to get the bank to confirm in writing that the funds are 100% secure and properly received.
It is only because of your agreement with your bank that they have the right to reverse the transaction.
Also, if the funds came into your account in USD, then they will reverse it in USD.
And the exchange rate is the exchange rate on the day...
So, based on all of the above, I would say that the bank is entitled to do what they did.
Continue dealing with the ombudsman, you might get some sort of satisfaction from them!