Currency Exposure
Short definition
Currency exposure is the map of which cash flow or balance-sheet item is tied to which rate at which tenor. Risk is size × shock × residual after hedge.
Detailed explanation
Split transaction (invoice currency), natural (cost and price pass-through) and translation items. The same USD revenue with USD costs is small net exposure; TL costs plus USD revenue is a net long USD book.
Embedded exposure: commodity prices passing through in dollars, FX-denominated rent and licences. If the position table leaves these off-balance-sheet, treasury is blind.
Why it matters for the CFO
A hedge programme built on the wrong exposure takes the opposite position — hedging dollar revenue while leaving dollar debt open.
How to read it
Net, tenor-split exposure is the decision input, not gross. “60% of sales in USD” does not describe the net gap.
Related calculators
Güven Sayılgan’s writing on this topic
The Foreign-Exchange Position Table and Its Use in Currency-Risk Management
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For companies operating in Türkiye, USD/TRY, EUR/TRY and the real effective exchange rate are complementary indicators; the CFO should read them together for co
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Definitions are educational. They are not investment, credit or tax advice.