Foreign Exchange Exposure Reports

When currency exchange rates fluctuate, companies have an exposure risk. Hedging provides a way to manage that risk.

For example, companies may have a policy to hedge all invoice instalments against exchange rate movements.

However, the quantity and value of despatch orders and invoice instalments can change. Deliveries might only partially be fulfilled, resulting in a lower quantity of material. Deliveries may be delayed, and the values might then be calculated based on prices in a different month.

Foreign exchange (FX) hedge positions for these invoice instalments must be adjusted if they no longer meet the company's hedging policy. FX hedge positions may be unwound, or carried forward or back.

In MineMarket, FX exposure can be managed via the Hedging Explorer for single quotation periods (QPs), or via the Commodity Exposure report for multiple QPs.

Inclusions

The FX Exposure report displays DOs with quotation periods within a date range, and compares the invoice instalments in their despatch order snapshots with FX hedging allocations.

In addition to matching the search criteria of the report, DOs must:

Not be child despatch orders
Not have Ignore for Hedging checked
Not be cancelled
Have a selectable (or no) status
Have a snapshot calculated by the MineMarket Marketing Service

The following invoice instalments are included when calculating the exposure for each DO:

For revenue snapshots, only instalments in snapshots that are specific to an invoice type
For cost snapshots, each instalment for each cost line from the default snapshot's invoice preview

FX hedge positions must be locked and have a selectable (or no) status to be included in the FX Exposure report.

Results

The FX Exposure report displays one row for each applicable DO.

For each DO, the report displays the exposure for each QP. More detailed information is available in a tooltip, which displays the:

Accounts Receivable of the DO for that QP—Positive for sales contract revenue; negative for purchase contract revenue and all costs
Allocated Amount to FX hedge positions for that QP—By default, positive if the hedge position Transaction Type is Buy; and negative for Sell. The sign of the allocation can be inverted from the default if required.
Amount at Risk (the exposure)—The accounts receivable minus the allocated amount
Hedged Percentage—The allocated amount divided by the accounts receivable multiplied by 100

Below the DOs, a row displays the unallocated amount of FX hedge positions for each QP. This aggregated amount includes the unallocated amount of any FX hedge positions that are not allocated or that are partially allocated.

The summary rows display information for each QP:

Accounts Receivable—Positive for net sales; negative for net purchase
Allocated Amount—Positive for net buy; negative for net sell
Risk—The difference between the accounts receivable and the allocated amount
Hedged Percentage—The allocated amount divided by the accounts receivable multiplied by 100