Economic exposure

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Foreign exchange risk management.

In foreign exchange risk analysis, the risk of adverse effects on the firm’s future operating cash flows, arising from changes in foreign exchange rates.

For example, key competitors having currency cost bases in weaker or depreciating currencies.

The term is also used to refer to the longer-term version of transaction exposure – for transactions expected to be agreed in the future, but not yet contractually committed.

This is sometimes called Pre-transaction risk or Pre-transactional exposure.

See also