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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2004
NOTE 16: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(c) Foreign Exchange Risk Management
The Corporation has borrowings denominated in foreign currencies. It is the Corporation’s policy to fully hedge the currency exposure immediately on undertaking such borrowings by entering into cross currency swaps and forward foreign exchange contracts. The objective of these contracts is to neutralise the impact of any foreign exchange rate fluctuation on the future obligations to make interest and principal repayments in accordance with established contractual obligations.
As a matter of disclosure only, the Australian dollar equivalent of the face value of foreign borrowings outstanding at balance date is as follows:
The net unrealised exchange loss on foreign currency borrowings of $12,572,000 is exactly offset by unrealised gain on cross currency swaps contracts.
The net unrealised exchange loss on foreign currency assets of $17,335,000 is exactly offset by unrealised gains on cross currency swap contracts.
Summary of Impact of Currency Swaps as at Balance Date.
The remaining terms and notional principal amounts of the Corporation’s outstanding foreign exchange rate contracts at balance date are:
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