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Foreign Currency Effect |
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Foreign Currency Effect The gain or loss on an investment denominated in a foreign currency due to changes in the exchange rate. For example, a rising domestic currency will result in a loss in a foreign investment because each foreign currency unit converted will result in fewer domestic currency units. The opposite is true for a falling domestic currency or a rising foreign currency. Foreign currency effects theoretically do not occur with pegged currencies if the foreign currency is pegged to the domestic one or vice versa. See also: Foreign exchange risk, Sovereign risk. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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