Unraveling the Mystery of FX Gain or Loss Line

Many corporate hedge programs are focused on delivering dollar-for-dollar offsets against changes in FX Gain/Loss arising from the re-measurement of non-functional currency monetary assets and/or liabilities. Companies are typically rewarded for reducing volatility in earnings driven by Other Income and Expense. While perfect offset is a noble hedge objective, it is not achievable. Substantial offset, however, is achievable, and understanding and communicating why it is not perfect is the difference between excellent hedge management and the “whack a mole” run around.

This course unravels the mystery of why a hedged FX gain or loss line is not zero, and why management should expect there to be noise even for “perfect” hedges. We’ll provide actionable insights to improve the results of your hedge program, including:

• How to identify sources of FX gains and losses in a balance sheet
• Performance reporting
• Preventative measures and trading tactics