Foreign exchange risk: Difference between revisions
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The risk of adverse effects | 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. | ||
Also known as Currency risk. | 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 Currency risk. | |||
== See also == | == See also == | ||
* [[Economic risk]] | * [[Economic risk]] | ||
* [[Exchange controls]] | * [[Exchange controls]] | ||
Revision as of 16:06, 17 March 2017
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 Currency risk.
