currency risk

Definition

The risk that a business' operations or an investment's value will be affected by changes in exchange rates. For example, if money must be converted into a different currency to make a certain investment, changes in the value of the currency relative to the American dollar will affect the total loss or gain on the investment when the money is converted back. This risk usually affects businesses, but it can also affect individual investors who make international investments. also called exchange rate risk.

Use currency risk in a sentence

The currency risk was something that gave me a headache and it made me very unhappy with what we were doing.

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When investing overseas you have to be aware of the currency risk and be prepared to possibly lose money when converting your investment back.

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Those investors purchasing foreign other assets denominated in a given local currency bear a currency risk in addition to the risks inherent to these types of investments.

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currency risk sharing covered arbitrage