FX Loss & Gain Calculator
The rate at the time of booking or invoice.
The rate at the time of payment or reporting.
Original Value (Quote Currency):
0.00
Current Value (Quote Currency):
0.00
Rate Variance:
0.00%
Net Financial Impact:
0.00
About the Exchange Rate Loss Calculator
In international business and personal finance, currency fluctuations can significantly impact the final value of a transaction. The Exchange Rate Loss Calculator helps you quantify exactly how much value has been lost or gained due to changes in foreign exchange (FX) rates between two specific dates—typically the invoice date and the payment date.
How to Calculate Exchange Rate Loss
Foreign exchange loss or gain occurs when the exchange rate changes between the time a transaction is recorded (booking date) and the time it is settled (settlement date). The formula used in this calculator is:
Net Impact = (Amount × Current Rate) – (Amount × Original Rate)
Where:
- Transaction Amount: The total sum in the base currency (e.g., USD).
- Original Rate: The exchange rate when the deal was agreed upon.
- Current Rate: The exchange rate at the time of conversion or payment.
Example Calculation
Imagine a UK company invoices a US client for $10,000 USD.
- Booking Date: The exchange rate is 0.75 GBP/USD. Expected revenue: £7,500.
- Payment Date: The rate drops to 0.72 GBP/USD. Actual revenue: £7,200.
- Result: The company suffers an exchange rate loss of £300.
Why Monitoring FX Loss is Critical
For businesses dealing with international suppliers or clients, small shifts in exchange rates can erode profit margins. This phenomenon, known as FX Risk or Currency Risk, requires careful monitoring. By calculating potential losses, businesses can decide whether to use hedging strategies like forward contracts or options to lock in rates and protect their bottom line.
Interpreting the Results
- Negative Value (Loss): The currency moved against you, resulting in less value in the quote currency than originally anticipated.
- Positive Value (Gain): The currency moved in your favor, resulting in a windfall or "FX Gain."