Fremdwährungsverlust

Fremdwährungsverlust is a term used in finance and accounting to describe a loss that arises from movements in exchange rates affecting values denominated in foreign currencies. It can occur whenever monetary items—such as cash, receivables, payables or loans—in foreign currencies are measured in the reporting currency and the relevant exchange rate changes unfavorably.

Two common contexts are:

- Remeasurement of monetary items: At reporting dates, foreign-currency items are translated into the domestic or reporting currency; adverse rate movements reduce the domestic currency value, creating a Fremdwährungsverlust.

- Translation of foreign operations: When consolidating financial statements, the assets and liabilities of foreign subsidiaries are translated into the parent’s currency. Negative translation effects contribute to Fremdwährungsverlust, while positive effects would be Fremdwährungsgewinn.

Accounting treatment varies by standards. Under IFRS (IAS 21), exchange differences on monetary items are generally recognized in profit or loss, though differences related to translating a foreign operation’s net investment may be recorded in other comprehensive income in consolidation. Local standards (such as German HGB) typically recognize foreign exchange differences in the income statement in the period in which the rate changes occur, with hedging and specific presentation rules influencing the impact.

Impact and management: Fremdwährungsverluste reduce net income and can affect equity and taxes, depending on jurisdiction and accounting framework. Companies mitigate such risks with hedging instruments (forwards, options) or by matching currency cash flows (natural hedges).

See also: Fremdwährung, Wechselkursrisiken, Währungsumrechnung.