Exchange rate

The price of one currency in terms of another. Take a rate of ₹80 to the dollar, chosen for round arithmetic rather than offered as a quote: $1,000,000 converts to ₹8 crore, and ₹10,00,000 converts to $12,500. The rupee moves enough that any rate printed here would be wrong within months, so read the live rate and redo the division.

For a company the rate matters through revenue and costs, and through debt. An exporter gains when the rupee weakens; an importer loses; a borrower with dollar debt and rupee revenue loses twice, since the liability grows in rupee terms while the ability to service it doesn't.

Hedging changes when the effect arrives. It doesn't remove it.

Read the currency exposure note before you model any exporter.

How much to worry depends on whether the exposure is transaction or translation. Transaction exposure is a real cash flow in a foreign currency and can be hedged. Translation exposure is the accounting effect of restating a foreign subsidiary's balance sheet, which moves reserves without moving cash and usually shouldn't be hedged at all.