# FX smashes $600m hole in Anglo accounts The firm said$523 million of this was due to the appreciation of the South African rand alone. The strength of the Australian dollar accounted for another \$85 million, while the impact of some other currencies slightly softened the blow.

A spokesperson for the group in London said its policy is not to hedge currency risk, as the firm has a diverse portfolio.

The currency impact was partially offset by higher dollar prices for gold, diamonds, platinum and base metals, said Tony Trahar, Anglo American’s chief executive.

Marcus Lun, analyst at Morgan Stanley in London, said this is a common attitude among companies in the mining sector, because their cost-base currencies tend to be linked to commodity prices. A strengthening rand, for example, will bring increased revenues for South African commodities, although there will be some time dislocation.

Currency risk specialists, however, disagree.

According to one London-based options dealer, while diversity of flows brings some form of netting, unless it is an absolute net, the firm is still at risk.

In addition, "prevailing exchange rates" are far from likely to remain stable in the coming year.

A corporate should have a currency risk management portfolio with a certain percentage hedged in forwards, and a percentage in options, the dealer said. "It’s an insurance policy."