Currency risk: Difference between revisions
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The risk of losses or other adverse effects resulting from a change in a foreign exchange rate, or from other unfavourable changes in relation to a foreign currency. | The risk of losses or other adverse effects resulting from a change in a foreign exchange rate, or from other unfavourable changes in relation to a foreign currency. | ||
Examples include: | Examples include: | ||
*A final receipt/payment of a different amount of domestic currency equivalent, than expected when a currency transaction was committed to (transaction risk) | |||
*A change in asset/liability values in a balance sheet, profit/loss in an income statement (translation risk) | |||
*A change in competitiveness as rates change relative to buyers, suppliers or competitors (economic risk). | |||
A more complex area of risk concerns contingent, or pre-transaction risk. | A more complex area of foreign exchange risk concerns contingent, or pre-transaction risk. | ||
Also known as Currency exposure or Foreign exchange risk. | Also known as Currency exposure or Foreign exchange risk. | ||
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* [[Contingent risk]] | * [[Contingent risk]] | ||
* [[Cross-currency interest rate swap]] | * [[Cross-currency interest rate swap]] | ||
* [[ | * [[Currency]] | ||
* [[Currency management]] | |||
* [[Devaluation]] | |||
* [[Redenomination risk]] | |||
* [[Pre-transaction risk]] | |||
* [[Transaction exposure]] | * [[Transaction exposure]] | ||
* [[Translation exposure]] | * [[Translation exposure]] | ||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
Latest revision as of 23:31, 20 November 2021
The risk of losses or other adverse effects resulting from a change in a foreign exchange rate, or from other unfavourable changes in relation to a foreign currency.
Examples include:
- A final receipt/payment of a different amount of domestic currency equivalent, than expected when a currency transaction was committed to (transaction risk)
- A change in asset/liability values in a balance sheet, profit/loss in an income statement (translation risk)
- A change in competitiveness as rates change relative to buyers, suppliers or competitors (economic risk).
A more complex area of foreign exchange risk concerns contingent, or pre-transaction risk.
Also known as Currency exposure or Foreign exchange risk.
