Omvandlingsexponering
Omvandlingsexponering, also known as currency translation exposure, refers to the risk that a company's financial statements, particularly its balance sheet and income statement, will be adversely affected by fluctuations in exchange rates when translating the financial results of foreign subsidiaries into the parent company's reporting currency. This exposure arises because assets, liabilities, revenues, and expenses denominated in foreign currencies must be converted to the reporting currency for consolidation purposes.
The primary impact of omvandlingsexponering is on the reported value of foreign net assets and earnings. When
Management strategies to mitigate omvandlingsexponering often involve the use of hedging instruments such as currency forwards,