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Translation Exposure Management

In: GLOBAL CORPORATE FINANCE A Focused Approach

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  • Suk H. Kim

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…

Suggested Citation

  • Suk H. Kim, 2023. "Translation Exposure Management," World Scientific Book Chapters, in: GLOBAL CORPORATE FINANCE A Focused Approach, chapter 8, pages 175-189, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811281969_0008
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    More about this item

    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;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • F3 - International Economics - - International Finance
    • F30 - International Economics - - International Finance - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F - International Economics

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