Forward currency contract mark-to-market

Hey guys,

I’ve been trying to understand why when marking to the market we should always take the opposite side of the original contract. For instance, if I’m a company that wants to hedge against future exchange moves, as the time passes the value of the contract for me will always be the difference between the hedged price and the current market price. For instance, if I bought forward USD/EUR@1.32 and at the expiry date the quotes are BID 1.34 ASK 1.35 then my gain is (1.35-1.32)*Nomial Amount = GAINED. In other words I will save the GAINED amount with my initial hedge.

However, when marking to market the formulas always consider taking the BID price, which would make 1.34-1.32 * Nominal. Why is that? I don’t want my dollars back, I need EUR.

Thanks

Found a good explanation:

http://www.analystforum.com/forums/cfa-forums/cfa-level-iii-forum/91320077