MKH Annual Report 2019

229 M K H B e r h a d 40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) (c) Foreign currency risk (Cont’d) Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Group’s profit for the financial year to a reasonably possible change in the USD exchange rate against their respective functional currencies, with all other variables held constant. Profit for the financial year The Group 2019 2018 RM RM USD/RM  Strengthened 5% (87,700) 410,400  Weakened 5% 87,700 (410,400) USD/RMB  Strengthened 3% 15,900 34,600  Weakened 3% (15,900) (34,600) USD/IDR  Strengthened 5% (6,683,200) (7,589,100)  Weakened 5% 6,683,200 7,589,100 Translation reserve The Group 2019 2018 RM RM IDR/RM  Strengthened 5% 4,531,000 3,689,200  Weakened 5% (4,531,000) (3,689,200) RMB/RM  Strengthened 3% 707,300 827,100  Weakened 3% (707,300) (827,100) (iv) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk relates to interest bearing financial assets and financial liabilities. Interest bearing financial assets include finance lease receivables, loan receivables and deposits with licensed banks. Deposits are placed for better yield returns than cash at banks and to satisfy conditions for bank guarantee. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019