This exposure can be mitigated through a foreign currency forward contract
The fair value of a foreign currency forward contract
will be affected by changes in the exchange rate, and the fair value of a put option for an available-for-sale security will be affected by changes in the fair value of the underlying security.
For example, assume a taxpayer undertakes to purchase a piece of equipment to be used in its trade or business and simultaneously enters into a foreign currency forward contract
(because the contract price was denominated in a foreign currency) to "fix" the price of the equipment in U.
For certain foreign currency derivatives, such as a foreign currency forward contract
The proper treatment of foreign currency forward contract
hedges of assets and liabilities denominated in a foreign currency is not easily discernible from the examples provided in the relevant statements (SFAS 52, Foreign Currency Translation; SFAS 133, Accounting for Derivative Instruments and Hedging Activities; SFAS 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities--an amendment of SFAS 133; and SFAS 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities) or from the implementation guides from the FASB Derivatives Implementation Group (DIG).
The impact of the sale of equity investment in MIBRAG includes the loss on settlement of our foreign currency forward contract
Caroline Rook, Chief Financial Officer, commented, "The realized portion of our foreign currency forward contract
gain, or actual cash generated, was $4.
A currency forward contract
, unlike an exchange-traded futures contract, can only be offset prior to maturity by agreement of both parties to the contract.
2 (1) Net other costs and revenue include: gain on sale of investments, write-down of investment, foreign exchange gain (loss) on unhedged long-term debt, fair value gain (loss) on a foreign currency forward contract
, debt retirement costs, other gains (losses) and equity loss on investees as detailed in the unaudited interim Consolidated Statements of Income and Deficit.
stamp duty recorded in general and administrative expenses; $145 million gain in other non-operating (expense) income related to euro-denominated bank balances associated with the upfront cash consideration for the acquisition of Visa Europe; and $42 million loss in other non-operating (expense) income related to currency forward contracts
entered into to mitigate a portion of the foreign currency exchange rate risk associated with the upfront cash consideration for the acquisition of Visa Europe.
All of Deutsche Bank's currency-hedged ETFs are fully hedged with currency forward contracts
, as is the WisdomTree fund.
By investing in their related unhedged, parent iShares ETFs (EFA, EWG and EWJ) and implementing foreign currency forward contracts
, iShares Currency Hedged ETFs provide an easy and cost-effective way to mitigate unwanted currency risk.