A perfect hedge (full coverage) on translation exposure can usually be achieved when:

Question

Quizplus · Accepted Answer

Translation exposure, which deals with the impact of currency fluctuations on reported financial statements, is difficult to perfectly hedge due to the complexity of accounting standards, timing issues, and the nature of the exposures. Forward, futures, and money market hedges are more suited to transaction exposures rather than translation exposures.

A Perfect Hedge (Full Coverage) on Translation Exposure Can Usually