We are an Australian based company, reporting our consolidated accounts in AUD. We have subsidiaries in different parts of the world reporting to us in different currencies. At the moment the way we deal with this is by setting an exchange rate for each currency at the beginning of the year and using this throughout the year. This means that any fluctuations are purely business related and we don’t have to reconcile back currency movements as well. Then at year end we post an adjustment for the actual FX movements in our stat accounts. We are a small-medium sized business and we consolidate in Excel. Does anyone have any suggestions of other exchange rate methods we could use?

You could revalue your exchange rate monthly, Quarterly, Semi-Annual.

What you really should think about is hedging your expose to USD so that no matter how the exchange rate fluctuates there is no material impact on your income.

That can be done with puts and calls on currency futures and options markets. Unfortunately it is not as easy as it seems, check out these links.

http://www.futuresknowledge.com/pdf/cme_currency_futures_to_hedge.pdf

http://ezinearticles.com/?Types-of-Foreign-Currency-Hedging-Vehicles&id=33053

Or just Google away!