Currency risk


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Currency risk

Currency Risk

In currency exchange, the possibility that one currency will devalue to the exchanger's detriment. For example, someone may move to the United Kingdom from the United States and change all of his/her money from dollars to pounds. If he/she moves back to the United States with the same amount of pounds, there is the possibility that the pound will have devalued, resulting in fewer dollars than he/she brought to the U.K. In 1996, economist Conway Lackman suggested an extension of the Capital Asset Pricing Model to help calculate exchange risk in international trade.
References in periodicals archive ?
Large multinationals can reduce currency risk through "natural" hedges from having suppliers and customers in multiple countries and currencies.
They use scenario analysis to stress test their currency risk management programs.
The takeaway is that managers can't always hedge against every currency risk and often shouldn't try.
However, given the volatility in the global markets, currency risk management will remain a primary focus.
It is a physically replicating fund which holds Japanese stocks and uses foreign exchange forward contracts to mitigate currency risk.
com/) currency risk is a kind of risk that stems from the changes in the valuation of currency exchanges.
MUMBAI -- The Reserve Bank of India has allowed non- residents to hedge currency risk for external commercial borrowings (ECBs) denominated in rupees with Indian banks.
And 55% do not manage currency risk, putting the average SME at risk of losing pounds 19,745 a year, bringing a national bill of pounds 20.
State Street Global Advisors (SSgA), the investment management business of State Street Corporation has launched its Dynamic Strategic Hedging programme in Asian markets to manage the currency risk of institutional investors.
In fact, the Reserve Bank of India (RBI) permits overseas investments up to $200,000 a year, but there is a currency risk which makes the investment riskier.
Hartford, Feb 16 (ANI/Business Wire India): In response to a growing demand by outsourcing customers for greater transparency into their providers' fiscal health and financial stability, Pelorus Advisors, a leader in specialized risk management services, has launched a currency risk management service for Indian outsourcing providers.
It was expected that these companies might be struggling to develop a logical currency risk framework or be concerned about trading and accounting for derivatives.