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As of December 31, 2015, COFIDE recorded net exchange profit for (in thousands)
S/.2,683 (profit for S/.48,087 as of December 31, 2014), presented net under “Exchange
earnings” of the statement of income.
COFIDE manages exchange risk through the match of its asset and liability operations,
monthly supervising global position of changes. Global position of changes is equal to
large positions less short positions in currencies other than the nuevo sol. Global position
includes positions of the statement of financial position (spot) and positions in derivatives
as well.
Variations in exchange rates affect financial statements, modifying income and expenses
expressed in domestic currency, as well as the valuation of all assets and liabilities of
COFIDE. Exchange risk is conducted within VaR calculation limits and sensitivity
analysis over exchange rates. Additionally, regulatory and internal limits of foreign
currency positions are monthly monitored.
Presented below, are sensitivities for the case of U.S. dollars fluctuations. For its volume,
U.S. dollar position is the only exposure that could cause material loss to COFIDE.
Negative fluctuations represent potential losses, while positive ones represent potential
profit.
Sensitivity analysis
Change in
exchange
rates
2015
2014
%
S/.000
S/.000
Devaluation
U.S. dollar
5
24,888
21,501
U.S. dollar
10
49,776
43,002
Revaluation
U.S. dollar
5
(24,888)
(21,501)
U.S. dollar
10
(49,776)
(43,002)
Fair value
Fair value is the amount for which an asset may be exchanged between a purchaser and a
seller duly informed, or the amount for which the obligation between a debtor and a
creditor may be settled with enough information, under terms of a freely negotiated
transaction.
Fair value is a measurement based on market; therefore a financial instrument
commercialized in a real transaction in a liquid and active market has a price that supports
its fair value. When the price for a financial instrument cannot be determined in active
market, fair value must be measured applying other valuation technique, trying to
maximize the use of relevant measurable variables and minimize the use of non-
measurable variables.
To calculate fair value of an instrument that is not traded in liquid markets, market value
of an instrument that is actively traded in the market, with similar characteristics, may be
used, or it may be obtained through an analytic technique, for example, discounted cash
flow analysis.