277 NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 31 January 2023 ACCOUNTABILITY (FINANCIAL STATEMENTS) 36. Derivatives Group 2023 2022 Assets RM million (Liabilities) RM million Assets RM million (Liabilities) RM million Hedging derivatives Non-current - Interest rate swaps (Note (a)) 340 - - (20) Current - Foreign exchange forward contracts (Note (b)) 40 (2) - - - Interest rate swaps (Note (a)) 29 - - (3) 69 (2) - (3) (a) Subsidiaries of the Group had entered into a series of USD interest swap contracts with banks. The interest rate swaps reflect the changes in fair value of those interest rate swaps which have been designated as cash flows hedge and are used to manage the exposure to the risk of changes in market interest rates arising from floating rate bank loans of the subsidiaries. (b) Subsidiaries of the Group had entered into the forward contracts to mitigate the Group’s exposure from exchange rate movements on foreign currency positions originating primarily from firm commitments denominated in currencies which are not in the functional currency of the respective subsidiaries and from net assets in foreign operations where the functional currencies are not in Ringgit Malaysia. The fair values of the interest rate swaps and foreign exchange forward contracts are determined by using the prices quoted by the counterparty banks which are categorised as Level 2 of the fair value hierarchy. There is no transfer from Level 1 and Level 2 or out of Level 3 during the financial year. The effects of the interest rate swaps and foreign exchange forward contracts on the Group’s financial position and performance are disclosed in Note 41(a).
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