Financial assets in foreign currency
6.58 The value of financial assets in foreign currency is measured by their current
market value in foreign currency converted into national currency at the
current exchange rate. Nominal holding gains may therefore occur not only because
the price of the asset in local currency changes but also because the exchange
rate changes. The total value of the nominal holding gains accruing over the
accounting period may be calculated in the usual way by subtracting the value of
transactions from the difference between the opening and closing balance sheet
values. For this purpose, transactions in the financial assets in foreign
currency must be converted into the national currency using the exchange rates at the
time the transactions occur, while the opening and closing balance sheet values
must be converted using the exchange rates prevailing at the dates to which
the balance sheets relate. This implies that the total value of the transactions – acquisitions less disposals – expressed in foreign currency is, in effect, converted by a weighted average
exchange rate in which the weights are given the values of transactions
conducted on different dates.