Foreign exchange risk: Difference between revisions
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*A final receipt/payment of a different amount of domestic currency equivalent, than expected when a currency transaction was committed to (transaction risk) | *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 asset/liability values in a balance sheet, or profit/loss in an income statement or both (translation risk) | ||
*A change in competitiveness as rates change relative to buyers, suppliers or competitors (economic risk). | *A change in competitiveness as rates change relative to buyers, suppliers or competitors (economic risk). | ||
| Line 12: | Line 12: | ||
Foreign exchange risk is also known as Currency exposure or Currency risk. | |||
== See also == | == See also == | ||
* [[Deal contingent forward]] | |||
* [[Economic risk]] | * [[Economic risk]] | ||
* [[Exchange controls]] | * [[Exchange controls]] | ||
* [[Foreign exchange]] | * [[Foreign exchange]] | ||
* [[Forward contract]] | |||
* [[Lagging]] | * [[Lagging]] | ||
* [[Leading]] | * [[Leading]] | ||
* [[ | * [[Market Risk in the Banking Book]] (MRBB) | ||
* [[Net investment hedge accounting]] | * [[Net investment hedge accounting]] | ||
* [[Pre-transaction risk]] | * [[Pre-transaction risk]] | ||
* [[Risk management]] | |||
* [[Transaction risk]] | * [[Transaction risk]] | ||
* [[Translation risk]] | * [[Translation risk]] | ||
==Other resource== | |||
*[https://www.treasurers.org/hub/blog/future-leader-perspectives-FX-risk-management ACT Future Leaders Perspectives - FX risk management] | |||
[[Category:Manage_risks]] | |||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
Latest revision as of 02:06, 23 May 2024
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, or profit/loss in an income statement or both (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.
Foreign exchange risk is also known as Currency exposure or Currency risk.
See also
- Deal contingent forward
- Economic risk
- Exchange controls
- Foreign exchange
- Forward contract
- Lagging
- Leading
- Market Risk in the Banking Book (MRBB)
- Net investment hedge accounting
- Pre-transaction risk
- Risk management
- Transaction risk
- Translation risk
