Investor Glossary-exchange rate riskInvestor Glossary-exchange rate riskInvestor Glossary-exchange rate riskInvestor Glossary-exchange rate riskInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Exchange Rate Risk

The HTML to link to this page
 

Exchange rate risk is the risk that a position will become less valuable as a result of foreign exchange rate fluctuation. Exchange rate risk is also called currency risk. Companies that do business internationally face considerable exchange rate risk given the time it may take for an order to be filled and the receivable paid. Known and anticipated corporate exchange rate risk can be managed through currency options, forwards, and swaps. An investor is exposed to exchange rate risk, too, when investing abroad. Major banks engage in considerable hedging to manage exchange rate risk through active trading of over the counter currency options. Speculators can profit considerably from a willingness to take on exchange rate risk, such as when George Soros famously bet on the fall of the British pound in 1992, earning a profit of $1billion.



Rate this exchange rate risk definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: labor relations, balance sheet, VIX, implied volatility, current ratio, reverse mortgage, risk management, minority interest, option premium, inflation, EBITDA, average price per share, ex-dividend date, annual return, 144a, wholly-owned subsidiary, irrevocable trust, Key Rate Duration, APR, stock split, debt service coverage, deferred tax, 1031 exchange, LIBOR, real GDP, Zero Cost Collar, liquidity ratio, 1035 exchange, FTSE, phantom income, covered put, in escrow, stock market close, per diem, margin rate, open position, quality assurance, dividends payable, deferred revenue, required rate of return, FICO score, retained earnings, diluted share, 401a, class C shares, ex-dividend, command economy, limit order, cancelled check


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use