Market risk,
in plain words.

The risk that a payment or receipt in another currency is worth less, or costs more, by the time it settles.

The change in reported results when a foreign subsidiary's accounts are restated into the group's reporting currency. Real in the accounts, never a cash movement.

The longer-term effect of currency moves on a company's prices, competitiveness and future cash flows.

Foreign-currency receivables, payables and loans that are remeasured at each period-end rate. The change lands in the FX result.

Currency flows the business expects but hasn't booked yet: planned sales, purchases or payroll.

Inflows and outflows in the same currency that offset each other. They only offset if they settle close together.

The currency of the main economic environment an entity operates in. Anything in another currency creates exposure.

The currency a group publishes its accounts in.

Currency risk on loans, charges and trades between a group's own entities. The balances cancel out in the group accounts; the FX gains and losses on them often don't.

An agreement to exchange two currencies at a fixed rate on a future date. It locks the rate; it doesn't fix the timing.

The gap between the spot rate and the forward rate, set mainly by the interest rates of the two currencies.

Two opposite trades in one: exchange currencies now and swap them back later at an agreed rate. Often used to roll a hedge forward.

The right, but not the obligation, to exchange at a set rate. It costs a premium up front and protects against a bad move while keeping a good one.

The share of an exposure that is hedged.

The board-approved rules for what to hedge, how much, how far ahead and with which instruments.

Building cover in slices over time instead of all at once, so the average rate moves smoothly.

How long until a hedge settles.

Accounting rules that let a hedge's gains and losses land in the same period as the risk it covers, instead of swinging the P&L on their own.

A hedge of future cash flows, such as forecast sales. Under hedge accounting its value changes wait in equity until the hedged flow happens.

A hedge of the value of a foreign subsidiary in the group accounts. It offsets translation swings in equity.

The bank on the other side of a trade. Orbit is never a counterparty, so it has nothing to sell you.

Splitting a reported FX result into the drivers that caused it, each traced to the line in your books behind it.

The total effect of currency moves on a period's results, usually booked to one ledger account.

The part of the result caused by the market itself: rates moving against the rates you planned or booked at.

The part caused by money arriving or leaving on different dates than planned or hedged.

The part caused by more or less exposure than the plan assumed, left unhedged.

Realised gains and losses come from settled transactions; unrealised ones from remeasuring open balances at period end. Both reach the P&L.

Restating this period at last period's rates, to show growth as if currencies hadn't moved.

The exchange rate assumed in the budget. Results are judged against it.

How much of the gap between planned and actual results came from currency rather than the business.

A class of a fund that hedges its foreign assets back to the investor's currency, so currency barely touches its return.

The range a hedged class's cover must stay inside, set around its target.

Cover sliding away from target as money comes in or assets gain value, while the hedge stays the size it was at the last roll.

Replacing hedges as they mature, usually monthly or quarterly, and resizing them to the class's exposure.

The cost of rolling a hedge, from the forward points and the dealing spread.

An extra hedge placed between rolls to bring cover back inside the band.

The value of a fund or share class per unit, struck by the administrator, usually daily.

One hundredth of a percent. 40 bps is 0.40%.

The rate to exchange currencies now, usually settling two business days later.

The gap between two currencies' interest rates. It sets forward points, so hedging can cost or earn money.

How much a rate tends to move. It drives option prices and how wide a policy band needs to be.