Exposure and Risk

In this chapter, the currency used for corporate reporting of financial results is referred to as the “home currency.” Home currency is used to denominate figures in the balance sheet and income statement. Unless otherwise specified, the home currency is the U.S. dollar. The generic terms “foreign currency” and “local currency” are used to describe currencies used for reporting by foreign operations, but not by the parent corporation. Some of the abbreviations used in this section and their meanings are as follows:

HC	Home currency, designating the reporting currency of the business. Unless otherwise noted, home currency is the U.S. dollar.
FC	Foreign currency
LC	Local currency, designating the foreign currency used to report financial results of foreign operations
TC	Third currency, used by a foreign operation that deals in other than the local currency.
X/R	Exchange rate between two currencies
F/X	Foreign exchange, or foreign currency markets