an obligor's interest in a nonfunctional currency denominated debt obligation is treated as a position in the nonfunctional currency. (B) Actively traded requirement For purposes of paragraph (4)(A)(ii), foreign currency for which there is an active interbank market is presumed to be actively traded. (d) Exception for hedging transactions and investment hedging units This section shall not apply in the case of— (1) any hedging transaction (as defined in section 1221(b)), and (2) any investment hedging unit (as defined in section 492). (e) Cross reference For provisions requiring capitalization of certain interest and carrying charges where there is a straddle, see section 263(g). . (2) Conforming amendments The last sentence of section 246(c)(4) is amended— (A) by inserting (as in effect before its repeal) after section 1092(c)(4) , and (B) by inserting (as so in effect) after section 1092(f) . (c) Debt instruments held by insurance companies (1) In general Subsection (a) of section 1221 is amended by striking or at the end of paragraph (7), by striking the period at the end of paragraph (8) and inserting