Should a corporation that receives quarterly royalty income, on products sold in different currencies than the one in which royalties are paid, specify the relevant fx rate as the quarterly average or end of quarter rate? Intuitively the monthly average rate has a lower variance so it should be preferred. Am I missing any nuances here?
edit: I just had the following thought. Wouldn't it make sense to look at historic trends of the exchange rates?. If the currency we are getting paid in has higher inflation rates than our key markets we would want to use the end of quarter rates. Does that make sense?