Currency risk: Difference between revisions

From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson
(Removed broken link to Will Spinney article)
imported>Doug Williamson
(Add link.)
 
Line 20: Line 20:
* [[Currency]]
* [[Currency]]
* [[Currency management]]
* [[Currency management]]
* [[Devaluation]]
* [[Redenomination risk]]
* [[Redenomination risk]]
* [[Pre-transaction risk]]
* [[Pre-transaction risk]]

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.


See also