34. FINANCIAL INSTRUMENTS (CONTINUED) 34.6 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices that will affect the Group’s financial position or cash flows. 34.6.1 Foreign currency risk The foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level and short-term imbalances are addressed by buying or selling foreign currencies at spot rates. The currencies giving rise to this risk are primarily United States Dollar (“USD”), Euro, British Pound Sterling (“GBP”), Indonesian Rupiah (“IDR”), Singapore Dollar (“SGD”) and Japanese Yen (“JPY”). Risk management objectives, policies and processes for managing the risk The Group does not have a fixed policy to hedge its sales and purchases via forward contracts. However, the exposure to foreign currency risk is monitored from time to time by management. Financial Statements DAGANG NeXCHANGE BERHAD 290 NOTES TO THE FINANCIAL STATEMENTS
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