Translation exposure occurs when an MNC translates each subsidiarys financial data to its home currency for consolidated financial statements. Even if translation exposure does not affect cash flows, it is a concern of many MNCs because it can reduce an MNCs consolidated earnings and thereby cause a decline in its stock price. Thus, some MNCs may consider hedging their translation exposure.Translation exposure occurs when an MNC translates each subsidiarys financial data to its home currency for consolidated financial statements. Even if translation exposure does not affect cash flows, it is a concern of many MNCs because it can reduce an MNCs consolidated earnings and thereby cause a decline in its stock price. Thus, some MNCs may consider hedging their translation exposure. What does it mean?