Oanda corporation Revision 5

Forex Hedge Accounting Treatment  

OANDA’s FXConsulting 

 

for Corporations

   

25 

 

Since some retail forex platforms allow hedges of any amount, and US Gadget has 100% confidence in 

this delivery, then they can hedge the exact amount of USD $243,736. 

 

 

Account 

 

Date 

Foreign Currency 

CAD – Debit (Credit) 

Reporting Currency 

US Dollar – Debit (Credit) 

forex hedge (balance sheet) 

Sep 1 

 

(71.29) 

forex hedge cost (loss on foreign 

exchange) 

Sep 1 

 

71.29 

Record the cost of hedging USD $243,736 (the difference between the sell and buy rates for the 

currency pair, 1.0254-1.0257). Convert the Canadian dollar loss to USD: (73.12) /1.0257 = (71.29) 

USD. 

 

A forex hedge will cost the difference in the sell and buy rates of the currency pair, as well as the 

applicable interest differential between the deposit rate and lending rate of the currency pair charged 

over the time period. In this example, the interest differential is recognized each period.