HEDGE ACCOUNTING FOR FOREIGN CURRENCY RISKS UNDER IFRS 9: A METHODOLOGICAL APPROACH FOR FOREIGN ECONOMIC ACTIVITY ENTITIES

Abstract

The intensification of foreign exchange market volatility amid geopolitical instability and full-scale armed conflict significantly increases currency risks of entities engaged in foreign economic activity. The relevance of this study stems from the need to ensure accurate and transparent reporting of hedging transactions in financial statements prepared under IFRS 9 Financial Instruments, as well as from a series of regulatory changes effective in 2025-2026 that directly affect the reporting practices of foreign trade entities, including the Amendments to IAS 21 Lack of Exchangeability (effective 1 January 2025) and amendments to IFRS 9 and IFRS 7 (effective 1 January 2026). The article systematizes three types of hedging relationships under IFRS 9 and reveals their accounting treatment. Qualification criteria for hedging relationships are analysed. An original algorithm for reflecting currency risk hedging transactions in financial statements is developed. Differences between IFRS 9 and IAS 39 requirements are identified. Special attention is paid to the regulatory context: the practical implications of the IAS 21 amendment for Ukrainian entities operating under wartime currency restrictions are highlighted, and the Post-implementation Review of IFRS 9 hedge accounting requirements launched by the IASB in Q1 2026 is noted. The scientific novelty consists in developing a comprehensive methodological approach to reflecting currency risk hedging transactions in the financial statements of Ukrainian foreign trade enterprises under current regulatory changes. Further research prospects relate to monitoring the results of the PIR of IFRS 9 hedge accounting and developing recommendations for hedge accounting disclosures under IFRS 7 and IFRS 18.