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Foreign currency translation The process is repeated presentation of financial information from one currency to another currency. While foreign currency conversion between the exchange of one currency to another currency physically.

Translation is a change in monetary units, as well as a balance sheet presented are expressed in British pounds back into the U.S. dollar equivalent value. There is no physical exchange that occurred, and no related transactions that have occurred as it carried out the conversion

The difference is, the translation is simply a change of monetary units, for example, on a balance sheet that is expressed in British pounds are presented back to the U.S. dollar equivalent value. There is no physical exchange that occurred, and no relevant transaction occurs. While the conversion, allowing the physical exchanges that occur and there is a related transaction occurring.

Balances in foreign currencies are translated into domestic currency equivalent value based on the foreign exchange rate is the price of one unit of a currency expressed in another currency. State’s major trading currencies are bought and sold in global markets. With linked via a sophisticated telecommunications network, market participants include banks and other currency intermediaries, businesses, individuals and professional traders.

Foreign currency transactions occur on the spot market, forward, or swap. Currency bought or sold on the spot generally must be sent as soon as possible, ie within 2 working days. Spot market exchange rate is influenced by many factors, including differences in inflation rates between countries, differences in national interest and expectations of the future exchange rate. Transaction on forward markets is an agreement to exchange one currency for a certain amount into another currency at a future date. Quotations on forward markets is expressed by the discount or premium of the spot rate.

Swap transaction involves the purchase of spot and forward sales or spot sales or purchases forward, on a currency simultaneously. Investors often make use of swap transactions to take advantage of interest rates higher in a foreign country, the same opportunity to protect themselves against unfavorable movements of the exchange rate of foreign exchange.

In terms of foreign currency translation

  1. Conversion, an exchange of one currency into another currency.
  2. Exchange rate now, the exchange rate prevailing on the date of the relevant financial report.
  3. Net asset position at risk, the excess assets are measured or denominated in foreign currency and in translasikan at the exchange rate of duty is now measured or denominated in foreign currencies and translated at the exchange rate now.
  4. Exchange forward contracts, an agreement to exchange currencies of different countries by using a specific rate (forward rate) at a given date in the future.
  5. Functional currency, is the main currency used by a company in the conduct of business activities. Usually such currency is the currency of the State where the company is located.
  6. Historical exchange rate, the exchange value of foreign currency that is used when an asset or liability denominated in foreign currencies bought or going.
  7. Reporting currency, the currency used in preparing the company financial statements.
  8. Spot exchange rate, the exchange rate for currency exchange in the time immediately.
  9. Translation adjustments, the adjustments arising from the translation of financial statements of a company’s functional currency into the reporting currency.

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