exchange rate risk

Exchange rate risk

Also called currency risk; the risk that an investment's value will change because of currency exchange rates.

Foreign Exchange Risk

The risk that the return on an investment may be reduced or eliminated because of a change in the exchange rate of two currencies. For example, if an American has a CD in the United Kingdom worth 1 million British pounds and the exchange rate is 2 USD: 1 GBP, then the American effectively has $2 million in the CD. However, if the exchange rate changes significantly to, say, 1 USD: 1 GBP, then the American only has $1 million in the CD, even though he/she still has 1 million pounds. Foreign exchange risk is also called exchange rate risk.

exchange rate risk

References in periodicals archive ?
Out of that amount, 64% is foreign debt, which is still not hedged to the exchange rate risk.
According to an official with ICBC, given the exchange rate risk and SDR basket currency share re-adjustment risk as the bond issuer, the World Bank needs risk hedging solutions to lock financing cost.
The exchange rate risk of sovereign bonds issued by governments in Sub Saharan Africa (SSA) in 2013 and 2014 is threatening losses of $10.
While the debt offering could modestly increase its total outstanding debt in the near term, it will help PLDT term out its debt maturity profile and reduce foreign exchange rate risk," Moody's assistant vice president Yoshio Takahashi said.
Using monthly data from four largest markets in the Emerging Latin America over the period 1996-2008, we find that the number and nature of driving factors for regional integration are very sensitive to the exchange rate risk measures.
The prices for foreign exchange options allow us to extract information on implied market perceptions of future exchange rate risk.
At the same time, derivatives provide vital hedging tools for managing the high levels of commodity price and exchange rate risk
To us there is only one risk and that is an exchange rate risk.
The European Commission authorised, on 8 March, a state guarantee scheme put in place by France to cover the exchange rate risk for aeronautic suppliers (AERO 2008), managed by COFACE.
oThe daily high demonstrates the increased demand among our global members and their commercial and investor clients to manage their exchange rate risk or gain exposure to the Indian rupee,o said Eric Hasham, DGCX Chief Executive Officer.
To reduce the exposure to foreign exchange rate risk, the company at the same time entered into a hedge contract securing approximately 39% of the contract value.
This paper investigates the net effect for eight Asian countries with Engle's (2002) dynamic conditional correlation (DCC) bivariate GARCH-M model that simultaneously estimates time-varying correlation and exchange rate risk.