PT  - JOURNAL ARTICLE
AU  - David Kwun
TI  - Hedging Cross-Currency and Interest-Rate Exposures Under FAS 138
DP  - 2001 Sep 21
TA  - Special Issues
PG  - 77--79
VI  - 2001
IP  - 1
4099  - https://pm-research.com/content/2001/1/77.short
4100  - https://pm-research.com/content/2001/1/77.full
AB  - Prior to the release of FASB Statement 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, most U.S. corporations had difficulty hedging real economic interest-rate and cross-currency exposures under then-existing FAS 133 guidelines. With the adoption of FAS 138, the FASB agreed to allow the use of cross-currency interest-rate swaps to hedge foreign-currency-denominated debt liabilities as either fair value hedges or cash flow hedges, and also amended the definition of the “benchmark interest rate” to include rates based on LIBOR for interest-rate swaps. These two important changes offered entities complying with FAS 133 both preserved access to international capital markets and hedge accounting treatment that should reduce earnings volatility and thereby preserve corporate equity values.