exchange rate risk
Foreign currency exposure
Exchange rate risk is the possibility of financial loss when currency values shift.
A company with revenue in euros faces exchange rate risk if the euro weakens against its home currency before conversion.
International investors, importers, and exporters all manage exchange rate risk through hedging strategies or by pricing in potential fluctuations: The deal collapsed because neither side would bear the exchange rate risk.
- hedgingNoncommittal maneuvering
- currency devaluationReducing money's official value
- currencyMedium of exchange
- volatilityRapid, unpredictable changeability
- market jittersInvestor nervousness about prices
fluctuation · arbitrage · trading floor · capital flows · balance of payments · international trade · appreciation · futures · forward contract · speculation · cash · financial market · central bank · financial derivatives · inflation protection · carry trade · money changing · drop
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