ACCOUNTABILITY | FINANCIAL STATEMENTS 305 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 January 2024 41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) (a) Market risk (continued) (ii) Foreign currency risk (continued) Hedge of firm commitments The Group in the previous financial year entered into foreign exchange forward contracts to hedge the foreign exchange risk in relation to firm commitments to purchase property, plant and equipment denominated in a foreign currency. The foreign exchange forward contracts matured in the current financial year. Effects of hedge accounting on the financial position and performance The effects of the foreign currency-related hedging instruments on the Group’s financial position and performance are as follows: 2023 RM million Firm commitments Carrying amount of derivatives (current asset) 6 Notional amount 254 Hedge ratio 100% Change in discounted spot value of outstanding hedging instruments since 1 February (5) Change in value of hedged item used to determine hedge effectiveness 5 Weighted average hedged rate for outstanding hedging instruments (including forward points) INR 82.4419 : USD 1 Hedge of net investment in a foreign subsidiary In the previous financial year, the Group raised, through the Rights Issue, proceeds denominated in RM to fund additional equity investments into a foreign subsidiary which are denominated in USD. The Group has been granted approval to convert the RM-denominated proceeds into USD by Bank Negara Malaysia with a requirement that any RM sold is fully repurchased in the future. In compliance with the above-mentioned requirement, the Group entered into foreign exchange forward contracts which were designated as a hedge of the net investment in the foreign subsidiaries. The changes in the spot component of the forward contracts, which are determined with reference to the relevant spot market exchange rates, are deferred in the foreign currency translation reserve. Cost of hedging is recognised in profit or loss.
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