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, 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. | |||
Also known as Currency exposure or Currency risk. | |||
== See also == | == See also == | ||
* [[ | * [[Deal contingent forward]] | ||
* [[ | * [[Economic risk]] | ||
* [[Exchange controls]] | |||
* [[Foreign exchange]] | * [[Foreign exchange]] | ||
* [[Forward contract]] | |||
* [[Lagging]] | * [[Lagging]] | ||
* [[Leading]] | * [[Leading]] | ||
* [[Transaction | * [[Market Risk in the Banking Book]] (MRBB) | ||
* [[Translation | * [[Net investment hedge accounting]] | ||
* [[Pre-transaction risk]] | |||
* [[Risk management]] | |||
* [[Transaction risk]] | |||
* [[Translation risk]] | |||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
Latest revision as of 14:46, 20 July 2022
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.
Also known as Currency exposure or Currency risk.
