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For our non-fixed interest rate loans, the interest rates will change in accordance with the fixed rates of the banks we borrowed from. Assuming an increase or decrease of 1% in the interest rates of our non-fixed interest rate loans, our interest payments in 2010 would have increased or decreased by NT$37 million (US$1.28 million). We have not used any derivative financial instruments to hedge interest rate risk. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. We anticipate that our cash, cash equivalents and cashflow from operations will be sufficient to fund our working capital needs and capital expenditure plans for the foreseeable future. As of December 31, 2010, our cash and cash equivalents amounted to NT$90.9 billion (US$3.1 billion). The risk associated with fluctuating interest rates is principally confined to our cash deposits in banks, which is one of the many ways we manage our capital, and interest income accounts for only a very small percentage of our total revenue. Therefore, we believe our exposure to interest rate risk is immaterial. 

## Foreign Currency Risk 

We are exposed to foreign currency risk as a result of (i) our foreign currency and derivative trading activities; (ii) our telecommunications equipment being sourced from overseas suppliers; (iii) our international settlement payments associated with our services for international calls and roaming traffic; and (iv) mutual funds denominated in foreign currencies. 

We entered into currency swap and forward exchange contracts to reduce our exposure to foreign currency risk due to fluctuations in exchange rates. Outstanding currency swap and forward exchange contracts on December 31, 2010 were as follows: 

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Net gain arising from all of our foreign currency trading, hedging and derivative financial instruments for the year ended December 31, 2009 was NT$63.4 million, including realized settlement losses of NT$62.9 million and valuation gain of NT$126.3 million. 

Net gain arising from all of our foreign currency trading, hedging and derivative financial instruments for the year ended December 31, 2010 was NT$63.1 million (US$2.2 million), including realized settlement gain of NT$35.2 million (US$1.2 million) and valuation gain of NT$27.9 million (US$1.0 million). 

## Equity Price Risk 

We are exposed to equity price risk as a result of our available-for-sale equity securities, including publicly- traded equities, NT dollar- and foreign currency-denominated mutual funds, and exchange-traded funds, or ETFs, and we manage our equity investment portfolio in accordance with our internal regulations. 

The table below presents the carrying amount and unrealized gain or loss for our available-for-sale equity securities as of December 31, 2010. 

