Corporate Foreign Exchange Risk Management

Key Terms and Abbreviations

• Adjusted net monetary position The net monetary position adjusted for items that are unexposed from a net income perspective due to the functional currency being identical to the transaction unit
• AL Assets and liabilities
• CTGL Currency translation gains and losses (relating to non‐monetary assets, to be reported in other comprehensive income)
• ERM Enterprise risk management
• Foreign currency Any currency other than the home currency
• Functional currency The currency in which a legal unit measures and reports its financial performance
• FVA Fair value accounting
• FX Foreign exchange: the need to convert units of one currency into units of another currency
• FXGL Foreign exchange gains and losses (relating to monetary assets, to be reported in net income)
• FXRM Foreign exchange risk management
• GL Gains and losses
• Home currency The currency in which the corporate group measures and reports financial performance. That is, the functional currency of the parent company
• IRM Integrated risk management
• Monetary asset/liability An asset or liability with a fixed number of units of currency to be received or paid
• Net AL position The sum of all assets denominated in a foreign currency net of the sum of all liabilities denominated in that currency
• Net monetary position The sum of all monetary assets denominated in a foreign currency net of the sum of all monetary liabilities denominated in that currency
• OCI Other comprehensive income
• PPE Property, plant, and equipment ...