The foreign exchange rules remain a mystery to many advisors. This paper examines, through a series of case studies, the anomalous and inconsistent outcomes that can arise when applying these rules to common financing methods including:
- foreign currency denominated loans and RPS
- AUD denominated loans coupled with a foreign currency swap
The case studies also consider certain issues arising from investing in foreign currency denominated investments, including:
- dividend hedging
- investments that are subject to “calls”.