There are three types: fair value hedges, cash flow hedges and hedges of a net investment in a foreign operation. To apply it, the hedging relationship must be documented at inception and the effectiveness requirements met.
It reduces fluctuations in periodic profit for companies exposed to currency and interest rate risk.
Source: TFRS 9
Related terms
Financial instruments (TFRS 9)The standard governing the classification, measurement and impairment of financial assets and liabilities, and hedge accounting.Exchange differencesThe difference arising from translating foreign-currency items at exchange rates on different dates.Accounting policiesThe specific principles, bases, conventions, rules and practices an entity applies in preparing its financial statements.Amortised costThe amount at which a financial asset or liability is measured at initial recognition, minus principal repayments, plus cumulative amortisation calculated using the effective interest method.AssociateAn entity over which the investor has significant influence but not control or joint control.BOBİ FRS (Turkish GAAP for SMEs)The financial reporting standard issued by the POA for large and medium-sized entities that are subject to independent audit but do not apply TFRS.
Last updated: October 22, 2026 · This definition is for general information only.