... Therefore the fluctuations of FOREX rate would influence the group reported profit through either the changing cost competitiveness, lagging in market adjustment to movements in rates or conversion differences accounted for specific transactions. Especially in some BP invested countries the currency is very dynamic, such as Russia. The change of interest rates could have significant effects on the value of asset or liability. Under this circumstance, the borrower or lender have direct implications. For example, if they have floating rate debt, when interest rate rises, more interest would have to pay. Whereas, if they have fixed rate debt, when the interest rate falls, they will lose money. Both affect their cash flows. Further, there are different economies at different countries, therefore they have different stability of interest rate. As a consequence, both BP and Logica face interest risk provided that they carry business in that country or they are going ...

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