TRANSLATION EXPOSURE MANAGEMENT

Suk H. Kim

Chapter 8 in Global Corporate Finance:A Focused Approach, 2023, pp 175-189 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Translation exposure, sometimes called accounting exposure, measures the effect of an exchange rate change on published financial statements of a firm. Foreign-currency assets and liabilities that are translated at the current exchange rate are considered to be exposed. In accounting terms, the difference between exposed assets and exposed liabilities is frequently called net exposure. If exposed assets are greater than exposed liabilities, foreign currency depreciations will result in exchange losses and foreign currency appreciations will produce exchange gains. On the other hand, if exposed assets are smaller than exposed liabilities, foreign currency depreciations will lead to exchange gains and foreign currency appreciations will lead to exchange losses…

Keywords: Global Finance; International Finance; International Financial Management; International Accounting; International Business; International Business Finance; Foreign Trade; International Economics; Foreign Exchange; International Corporate Finance; Multinational Finance; International Taxation (search for similar items in EconPapers)
JEL-codes: F F21 F23 F3 F30 F31 G3 (search for similar items in EconPapers)
Date: 2023
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