text: Risk to be hedged by derivative transactions 
  (1) Market risk 
  The financial market risk to which the Group is generally exposed in 
  its operations and the relevant derivative transactions primarily used 
  for hedging are summarized as follows: 
  • Foreign exchange risk associated with assets and 
  
  liabilities 
  denominated in foreign currencies; forward foreign exchange 
  contracts, foreign currency options, and currency swaps; 
  
  The basic hedge policy is subject to the approval of the Monthly 
  Hedge Policy Meeting attended by the corporate officer in charge of 
  Treasury Department. Execution and management of all deals are to 
  be conducted pursuant to the Rule. Derivative transactions are 
  conducted by a special section of the Treasury Department and 
  monitoring of contracts for such transactions and confirming the 
  balance of all open positions are the responsibility of back office and 
  risk management section. Commodity futures contracts are to be 
  handled also by Treasury Department under guidelines which are to 
  be drawn up by the MRMC (Materials Risk Management Committee). 
  The MRMC is chaired by the corporate officer in charge of the 
  Purchasing Department and the corporate officer in charge of 
  Treasury Department and it will meet approximately once every six 
  months. 
  
  • Interest rate risk associated with sourcing funds and investing: 
  interest-rate swaps; 
  
  • Risk of fluctuation in stock prices: options on stocks; 
  • Risk of fluctuation in commodity prices (mainly for precious metals): 
  commodity futures contracts 
  
  (2) Credit risk 
  The Group is exposed to the risk that a counterparty to its financial 
  transactions could default and jeopardize future profits. We believe 
  that this risk is insignificant as the Group enters into derivative 
  transactions only with financial institutions which have a sound credit 
  profile. The Group enters into these transactions also with Renault 
  Finance S.A. (“RF”), a specialized financial subsidiary of the Renault 
  Group which, we believe, is not subject to any such material risk. This 
  is because RF enters into derivative transactions to cover such 
  derivative transactions with us only with financial institutions of the 
  highest caliber carefully selected by RF based on its own rating 
  system which takes into account each counterparty’s long-term credit 
  rating and shareholders’ equity. 
  
  The status of derivative transactions is reported on a daily basis to 
  the chief officer in charge of Treasury Department and on an annual 
  basis to the Board of Directors. Credit risk is monitored quantitatively 
  with reference to Renault’s rating system based principally on the 
  counterparties’ long-term credit ratings and on their shareholders’ 
  equity. The Finance Department sets a maximum upper limit on 
  positions with each of the counterparties for the Group and monitors 
  the balances of open positions every day. 