exchange rate 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 currency risk.

Use exchange rate risk in a sentence

There was a clear exchange rate risk involved and that meant we would have to take caution when doing it.

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Many people are interested in learning about trading currencies on Forex, however they should always take the EXCHANGE RATE RISK into account to make sure that they are not going to lose alot of money if the currency exchange does not go as expected.

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The market traders yesterday had a wild set of swings before lunchtime because of the new Federal Reserve report that caused a weakened dollar and considerable exchange rate risk to investors.

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