7.3.2.2. Currency risk
Currency risk largely arises on account of fluctuations in the EUR/PLN, USD/PLN and NOK/PLN exchange rates, and it mainly affects the Parent. The key sources of exposure include:
- Trade payables (mainly in respect of natural gas purchased by the Group (Note 6.2.3.),
- EUR-denominated debt securities in issue (Note 5.2.),
- CCIRS hedging a NOK-denominated loan to PGNiG Upstream International AS (the loan is eliminated in the consolidated financial statements) (Note 7.2.), and
- Cash and cash equivalents (Note 5.4.).
The hedging measures implemented by the Group are mainly intended to provide protection against currency risk. For details of the hedging transactions, see Note 7.2.
Derivative instruments used to hedge against currency risk associated with trade payables denominated in foreign currencies (chiefly USD and EUR) include call options, option strategies, swaps, and forwards. For detailed information on derivative transactions executed by the Group (derivatives designated for hedge accounting and economic hedges not designated for hedge accounting), see Note 7.2.
The table below presents the Group’s exposure to currency risk arising in connection with material items denominated in foreign currencies, and an analysis of the Group’s sensitivity to the risk of movements in foreign exchange rates that the Group considers to be reasonably possible as at the reporting date (December 31st 2016).
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| 2016 | Carrying amount | Value at risk | EUR/PLN | USD/PLN | NOK/PLN | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Exchange rate change: +10% | Exchange rate change: -10% | Exchange rate change: +10% | Exchange rate change: -10% | Exchange rate change: +10% | Exchange rate change: -10%v | ||||||||||
| Profit/ (loss) |
Other compre-hensive income | Profit/ (loss) |
Other compre-hensive income | Profit/ (loss) |
Other compre-hensive income | Profit/ (loss) |
Other compre-hensive income | Profit/ (loss) |
Other compre-hensive income | Profit/ (loss) |
Other compre-hensive income | ||||
| Financial assets | |||||||||||||||
| Trade receivables | 3,516 | 686 | 32 | – | (32) | – | 19 | – | (19) | – | 1 | – | (1) | – | Note 6.2.2. |
| Derivative financial instruments (assets) | 623 | 233 | 187 | – | – | – | – | 24 | – | – | – | – | 94 | – | Note 7.2. |
| Cash and cash equivalents | 5,829 | 640 | 18 | – | (18) | – | 32 | – | (32) | – | – | – | – | – | Note 5.4. |
| Financial liabilities | |||||||||||||||
| Financing liability | 6,352 | 3,609 | (243) | – | 243 | – | (49) | – | 49 | – | – | – | – | – | Note 5.2. |
| Trade payables | 1,290 | 939 | (23) | – | 23 | – | (48) | – | 48 | – | (2) | – | 2 | – | Note 6.2.3. |
| Derivative financial instruments (liabilities) | 346 | – | – | – | (187) | – | – | – | – | (12) | (94) | – | – | – | Note 7.2. |
| Effect of exchange rate movements | (29) | – | 29 | – | (46) | 24 | 46 | (12) | (95) | – | 95 | – | |||
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| 2015 | Carrying amount | Value at risk | EUR/PLN | USD/PLN | NOK/PLN | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Exchange rate change: +10% | Exchange rate change: -10% | Exchange rate change: +10% | Exchange rate change: -10% | Exchange rate change: +10% | Exchange rate change: -10% | ||||||||||
| Profit/ (loss) |
Other compre-hensive income | Profit/ (loss) |
Other compre-hensive income | Profit/ (loss) |
Other compre-hensive income | Profit/ (loss) |
Other compre-hensive income | Profit/ (loss) |
Other compre-hensive income | Profit/ (loss)) |
Other compre-hensive income | ||||
| Financial assets | |||||||||||||||
| Trade receivables | 2,541 | 391 | 16 | – | (16) | – | 14 | – | (14) | – | 1 | – | (1) | – | Note 6.2.2. |
| Derivative financial instruments (assets) | 709 | 326 | 190 | 8 | – | – | – | 46 | 10 | – | – | – | 112 | – | Note 7.2. |
| Cash and cash equivalents | 6,022 | 834 | 18 | – | (18) | – | 47 | – | (47) | – | 1 | – | (1) | – | Note 5.4. |
| Financial liabilities | |||||||||||||||
| Financing liability | 6,382 | 3,567 | (238) | – | 238 | – | (51) | – | 51 | – | – | – | – | – | Note 5.2. |
| Trade payables | 956 | 600 | (14) | – | 14 | – | (24) | – | 24 | – | (9) | – | 9 | – | Note 6.2.3. |
| Derivative financial instruments (liabilities) | 1,165 | 1 | – | – | (190) | – | (13) | – | – | (24) | (112) | – | – | – | Note 7.2. |
| Effect of exchange rate movements | (28) | 8 | 28 | – | (27) | 46 | 24 | (24) | (119) | – | 119 | – | |||
