Managing foreign exchange risk

Foreign exchange risk continues to be a topic of interest, because of increased foreign exchange rate volatility and an expanding risk landscape. There is an increased focus at Board level to have robust foreign exchange risk management processes.

Understanding how exchange rate fluctuations can impact a multinational Company’s accounting results is complex. Finance professionals face a major challenge in demonstrating to shareholders the distorting potential of foreign exchange rates on both their management reporting results and their consolidated financial statements prepared under relevant accounting standards.

Companies, that are exposed to foreign exchange risk currently and do not apply hedge accounting under the accounting requirements are exposed to foreign exchange volatility in their profit and loss. This can make achieving KPI’s and interpreting results challenging for the business.

How to address these issues?

PwC Hungary’s team of treasury experts are available to discuss this topic with you to help identify issues and potential solutions for your business. Our experts can develop a hedging strategy, documentation and policy tailored to your Company, and determine what accounting measures you need to take according to either Hungarian Accounting Standards or for International Financial Reporting Standards (IFRS).