Table:
|  | Year-ended 31 March 2019 | Year-ended 31 March 2018 |
| --- | --- | --- |
|  | $M | $M |
| 10% movement in sterling to US dollar value |  |  |
| Profit or loss | 1.7 | 5.1 |
| Equity | 33.8 | 37.4 |
| 10% movement in euro to US dollar value |  |  |
| Profit or loss | 1.5 | 7.5 |
| Equity | (9.8) | (10.8) |
Paragraphs:
Foreign Currency Risk
The Group is exposed to translation and transaction foreign exchange risk. Several other currencies in addition to the reporting currency of US dollar are used, including sterling and the euro. The Group experiences currency exchange differences arising upon retranslation of monetary items (primarily short-term inter-Company balances and long-term borrowings), which are recognised as an expense in the period the difference occurs. The Group endeavours to match cash inflows and outflows in the various currencies; the Group typically invoices its customers in their local currency and pays its local expenses in local currency, as a means to mitigate this risk.
The Group is also exposed to exchange differences arising from the translation of its subsidiaries’ Financial Statements into the Group’s reporting currency of US dollar, with the corresponding exchange differences taken directly to equity.
The following table illustrates the movement that ten per cent in the value of sterling or the euro against the US dollar would have had on the Group’s profit or loss for the period and on the Group’s equity as at the end of the period.
Any foreign exchange variance would be recognised as unrealised foreign exchange in the Consolidated Statement of Profit or Loss and have no impact on cash flows.
Question:
Where does the currency exchange differences that the Group experiences arise from?
Answer: arising upon retranslation of monetary items (primarily short-term inter-Company balances and long-term borrowings), which are recognised as an expense in the period the difference occurs.