An FX gain/loss is the change in the value of foreign exchange-denominated transaction as reflected in the income statement. A sales transaction creates an FX gain (loss) when the foreign currency appreciates (depreciates) against the home currency of the company.  

If this position is hedged with a financial instrument like a currency forward contract, this contract will create offsetting FX losses and gains. An FX gain/loss is said to be unrealised when it is reflected in financial statements while the transaction has not yet been settled. When the transaction is settled, the FX gain/loss is realised.

The ultimate objective of the finance team is to maximise the value of the business. One way to enhance the value of the business with currency management is to remove FX gains and losses from financial statements. Standalone balance sheet hedging programs are commonly used by firms is important for managing foreign exchange risks and minimising the accounting impact of gains and losses.