Currency risk: Difference between revisions
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The risk | 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: | |||
(i) a final receipt/payment of a different amount of domestic currency equivalent, than expected when a currency transaction was committed to (transaction risk), or | |||
(ii) a change in asset/liability values in a balance sheet, profit/loss in an income statement (translation risk), or | |||
(iii) 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 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. | ||
Revision as of 09:36, 1 June 2015
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:
(i) a final receipt/payment of a different amount of domestic currency equivalent, than expected when a currency transaction was committed to (transaction risk), or
(ii) a change in asset/liability values in a balance sheet, profit/loss in an income statement (translation risk), or
(iii) 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.
Also known as Currency exposure or Foreign exchange risk.
See also
- Contingent risk
- Cross-currency interest rate swap
- Foreign exchange risk
- Transaction exposure
- Translation exposure
