foreign exchange risk

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Foreign exchange risk

The risk that a long or short position in a foreign currency might have to be closed out at a loss due to an adverse movement in exchange rates. In general, the risk of an adverse movement in 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.

foreign exchange risk

The risk that the exchange rate on a foreign currency will move against the position held by an investor such that the value of the investment is reduced. For example, if an investor residing in the United States purchases a bond denominated in Japanese yen, a deterioration in the rate at which the yen exchanges for dollars will reduce the investor's rate of return, since he or she must exchange the yen for dollars. Also called exchange rate risk.
References in periodicals archive ?
The rules are there to mitigate foreign-exchange risk," Mohamed Azahari Kamil, chief executive officer at Asian Finance Bank Bhd in Kuala Lumpur, said in an interview.
Chief Executive Stefan Jacoby stated that he expects this step as a method to help his company decrease foreign-exchange risk.
Each fund will provide a share-class denominated in yuan to cater to investors from China who do not want to take foreign-exchange risk, the bank said.
Large foreign investors are exposed to foreign-exchange risk - raising capital offshore for investment in Myanmar, but generating sales and profits in kyat.
Master trusts separate back-office services for pension funds from investment services for the same funds to create unified trustee accounts for custody, settlement, receipt of interest and dividend payments, foreign-exchange risk management and other administrative functions.
Moreover, other market risks, such as foreign-exchange risk or commodity-price risk, may affect your business decisions.
Now, Medibank will also use the system's FXGO function to manage their foreign-exchange risk, execute FX trades and get requests for quotes (RFQs) in spot, forwards, swaps, options and deposits.
AES Panama's ratings are based on its strong portfolio of assets, competitive dispatch position, solid multiple power purchase agreements (PPAs), adequate financial profile, healthy projected debt service coverage under various stress scenarios, and the absence of foreign-exchange risk.
Fortuna's ratings reflect its position as the largest hydroelectric plant in Panama; its competitive dispatch priority, supported by a large storage reservoir; a sound operating strategy to optimize contract electricity sales; its acceptable projected debt-service coverage under various stress scenarios; and absence of foreign-exchange risk.
The ratings reflect Fortuna's position as the largest hydroelectric plant in Panama; its competitive dispatch priority, supported by a large storage reservoir; a sound operating strategy to optimize contract electricity sales; its acceptable projected debt-service coverage under various stress scenarios; and absence of foreign-exchange risk.
The assigned rating reflects Fortuna's position as the largest hydroelectric plant in Panama, its competitive dispatch position supported by a large storage reservoir, a sound operating strategy to optimize contract electricity sales, its acceptable projected debt service coverage under various stress scenarios, and a lack of foreign-exchange risk.
The assigned rating reflects Fortuna's position as the largest hydroelectric plant in Panama, its competitive dispatch position supported by a large storage reservoir, its sound operating strategy to optimize contract electricity sales, acceptable projected debt-service coverage under various stress scenarios, and lack of foreign-exchange risk.