Every foreign supplier is a small forex position
A UAE travel agency paying a European hotel in EUR, an American car rental company in USD, and invoicing its own customer in AED is running, whether it realises it or not, a small foreign exchange position on every international booking. The rate on the day the supplier is paid is rarely the rate on the day the customer was quoted — and that gap is either a small windfall or a small loss, booking by booking.
Why most agencies don't track this
Tracking forex gain or loss properly requires converting every foreign-currency transaction to AED at the applicable rate and posting the difference — a manual journal entry most bookkeepers skip unless the amount looks large enough to bother with. Across hundreds of small international bookings, though, the untracked total is rarely trivial.
A practical approach
The workable middle ground for most agencies isn't hedging currency exposure — it's simply making forex gain and loss visible, booking by booking, so pricing decisions (how much buffer to build into an international quote) are based on real historical data rather than a guess.
- Record every supplier cost in its original currency, not pre-converted
- Let the system apply the AED conversion at the rate applicable on the transaction date
- Post the forex gain or loss automatically rather than as a manual month-end adjustment
- Review forex exposure by supplier currency at least quarterly
How Muhasib automates this
Muhasib records supplier costs in their original currency and converts to AED automatically, posting any forex gain or loss to the ledger without a manual journal entry — so the exposure is visible instead of buried.