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foreign exchange gain or loss

A foreign exchange gain and loss, or FX gain and loss, is the result of a change in the exchange rate used when an invoice is entered at one rate, and valued in a financial statement at another. A foreign exchange gain or loss can be unrealised or realised.

An unrealised FX gain or loss reflects the change in the value of foreign currency denominated sales or purchase transactions that are recorded in financial statements prior to the settlement of the invoices. When the transaction is settled, the FX gain and loss is realised.