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Currency Risk

Our base currency is the US Dollar and we are exposed to currency risks whenever there are transactions in non-base currencies. In general, purchases are transacted in the local currencies of the respective origins with sales transactions mainly in G7 currencies.

However, for some business units, the purchases are transacted in the base currency and sales are transacted in the local currencies of the destination markets. Where possible and as a matter of policy, we use forward contracts to hedge our foreign currency exchange exposures arising from the purchase and sale of products in currencies other than our base currency. Where such instruments are not available, we control the currency exposure by setting limits on the amount and duration of such exposure. We also attempt to create natural hedges by matching the value of sales and purchases to and from the same geographical market.