175 Annual Report 2024 29 FINANCIAL RISK MANAGEMENT (continued) Foreign currency risk (continued) Sensitivity analysis A reasonably possible 10.0% weakening of the Singapore dollar, as indicated below, against the following foreign currencies at 31 December would have (decreased)/increased the Statement of Total Return and Unitholders’ Funds by the amounts shown below. This analysis assumes that all other variables, in particular, interest rates, remain constant. Statement of Total Return Unitholders’ Funds $’000 $’000 Group 2024 USD – (764) HKD – (235) EUR (719) – AUD – – JPY – 55 (719) (944) 2023 USD – (33) HKD – 1,512 EUR (741) – AUD – – JPY – 3,843 (741) 5,322 A reasonably possible 10.0% strengthening of the Singapore dollar against the above currencies would have had an opposite effect of similar quantum on the above currencies to the amounts shown above, on the basis that all other variables remain constant. Interest rate risk The Group adopts a policy of ensuring that at least 70.0% (2023: 70.0%) of its interest rate risk exposure is at a fixed-rate. This is achieved partly by entering into fixed-rate instruments and partly by borrowing at a float rate and using interest rate swaps and cross currency swaps as hedges of the variability in cash flows attributable to interest rate risk. The Group applies a hedge ratio of 1:1. The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the reference interest rates, tenors, repricing dates and maturities and the notional or par amounts. The Group assesses whether the derivative designated in each hedging relationship is expected to be effective in offsetting changes in cash flows of the hedged item using the critical terms method. When all critical terms match, the economic relationship is considered 100% match.
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