currency risk

Discipline: Economics

Currency Risk (or foreign exchange risk) occurs when more than one currency is involved in dealings whose positions will be closed on a future date. Since the outcome of such a transaction will be determined also by the change in the exchange rates, the parties bear a currency risk.

Hedging instruments are used in order to overcome currecy risks.

Also see:

· currency
· currency depreciation
· exchange rate
· fixed exchange rates
· floating exchange rates
· hedging

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