Due to the global nature of our operations, we are exposed to exchange rate fluctuations on our financial instruments denominated in various currencies. The majority of our currency risk is driven by operational costs, including income tax expense, incurred in local currencies by our subsidiaries. As part of our risk management program, we attempt to mitigate currency risk through a hedging program using forecasts of our anticipated future cash flows and balance sheet exposures denominated in foreign currencies. We enter into foreign exchange forward contracts, generally for periods up to 12 months, to lock in the exchange rates for future foreign currency transactions, which is intended to reduce the variability of our operating costs and future cash flows denominated in local currencies. While these contracts are intended to reduce the effects of fluctuations in foreign currency exchange rates, our hedging strategy does not mitigate the longer-term impacts of changes to foreign exchange rates. Although our functional currency is the U.S. dollar, currency risk on our income tax expense arises as we are generally required to file our tax returns in the local currency for each particular country in which we have operations. While our hedging program is designed to mitigate currency risk vis-�nbsp;-vis the U.S. dollar, we remain subject to taxable foreign exchange impacts in our translated local currency financial results relevant for tax reporting purposes.
Our major currency exposures at December 31, 2016 are summarized in U.S. dollar equivalents in the following table. We have included in this table only those items that we classify as financial assets or liabilities and which were denominated in non-functional currencies. In accordance with the IFRS financial instruments standard, we have excluded items such as pension and non-pension post-employment benefits and income taxes from the table below. The local currency amounts have been converted to U.S. dollar equivalents using spot rates at December 31, 2016.
Canadian Chinese Thai
dollar renminbi baht
---------- ---------- ----------
Cash and cash equivalents $ 5.1 $ 12.4 $ 1.4
Accounts receivable and other financial
assets 9.6 18.2 1.5
Accounts payable and certain accrued and
other liabilities and provisions (49.0) (43.9) (15.3)
---------- ---------- ----------
Net financial assets (liabilities) $ (34.3) $ (13.3) $ (12.4)
========== ========== ==========
Foreign currency risk sensitivity analysis:
The financial impact of a one-percentage point strengthening or weakening of the following currencies against the U.S. dollar for our financial instruments denominated in such non-functional currencies is summarized in the following table as at December 31, 2016. The financial instruments impacted by a change in exchange rates include our exposures to the above financial assets or liabilities denominated in non-functional currencies and our foreign exchange forward contracts.
Canadian Chinese Thai
dollar renminbi baht
---------- ---------- ----------
Increase (decrease)
1% Strengthening
Net earnings $ 0.9 $ (0.3) $ 0.1
Other comprehensive income 1.1 0.6 0.7
1% Weakening
Net earnings (0.9) 0.3 (0.1)
Other comprehensive income (1.0) (0.6) (0.7)
