Barclays 2006 Annual Report Download - page 246

Notes to the accounts
For the year ended 31st December 2006
Barclays PLC
Annual Report 2006
242
55 Currency risk
Foreign currency exposures comprise structural foreign currency exposures, which arise from investments in the Group’s overseas operations and
other investments; and those originating in trading activities.
The Group holds foreign currency net investments and is exposed to fluctuations in the Group’s share of their net assets measured in their functional
currencies caused by movements in exchange rates between these currencies and Sterling, the Group’s reporting currency.
The carrying value of the Group’s foreign currency net investments and the foreign currency borrowings and derivatives used to hedge them were
as follows:
2006 2005
Foreign Borrowings Derivatives Remaining Foreign Borrowings Derivatives Remaining
currency which hedge which hedge structural currency which hedge which hedge structural
net the net the net currency net the net the net currency
Functional currency of the investments investments investments exposures investments investments investments exposures
operation involved £m £m £m £m £m £m £m £m
United States Dollar 4,462 2,141 – 2,321 2,254 428 – 1,826
Euro 3,409 1,185 – 2,224 3,326 1,017 – 2,309
Rand 2,849 – 2,665 184 3,143 – 3,056 87
Japanese Yen 2,754 202 2,527 25 3,118 195 2,914 9
Swiss Franc 2,071 158 1,900 13 138 129 – 9
Other 2,069 205 410 1,454 1,736 222 228 1,286
Total 17,614 3,891 7,502 6,221 13,715 1,991 6,198 5,526
In addition to the above, the Group has US Dollar and Euro Preference Shares and reserve capital instruments in issue that are treated as equity
under IFRS.
In accordance with Group policy, as at 31st December 2006 and 31st December 2005, there were no material net currency exposures in the non-
trading book relating to transactional (or non-structural) positions that would give rise to net currency gains and losses recognised in the profit and
loss account.
The Daily Value at Risk (DVaR) methodology is used by the Group to estimate potential losses arising from exposure to market risk, including
currency risk, on trading positions. The tables shown on page 235 show an analysis of DVaR for the market risk exposures in Barclays Capital.