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Hi,
I have a general question regarding FX gains/losses within accounts when hedging with forward contracts.
If a company reports “exchange losses” in their P/L and they use forward contracts, are these realised losses of forward rate vs spot rate at the settlement date of a contract? Or are these unrealised movements as at the reporting date?
If a company has one USD receivable into GBP, and they hedge the entirety using a forward contract, there should be no gain/loss reported?
Thanks,
Hi,
The losses are from looking at the forward rate on the contract and the equivalent forward rate at the date we are looking at today. Inefficiencies will arise as the forward is using the forward rate at that date, whereas the receivable is being translated at the spot rate on that date.
Thanks
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