We support the objective of the interpretation to remove the ambiguity in IAS 21 regarding whether the hedged risk is the difference between the functional currency of the foreign operation and the functional or presentation currency of the parent. We recognise the arguments both for and against that are included in the draft interpretation and on balance agree with the conclusion that the IFRIC has reached.

We agree with the clarification that any parent entity within a group that has an interest in a foreign operation may apply net investment hedging. We believe the draft interpretation should be clearer as to whether designated net assets are either the net assets of individual foreign operations or net assets of a sub-consolidated foreign operation (ie a foreign operation that itself has investments in foreign operations and therefore converts its investments in foreign operations into its functional currency in determining a sub-consolidation). We believe both approaches are acceptable but we do not believe the draft interpretation is clear.

Our major concern with the draft interpretation is the guidance on which entity within the group can hold the hedging instrument.

• IFRIC's Draft Interpretation D22 Hedges of a Net Investment in a Foreign Operation (188k).
• Our Summary of IFRIC D22
• Links to All Deloitte Comment Letters to IASB, IASC, and related bodies since 1995.