Definition of Currency risk:
Uncertainty about the value of the future currency.
Currency risk, also called currency risk, arises from changes in the price of one currency in relation to another currency. Investors or companies that have commercial assets or activities that cross national borders face currency risk, which can lead to unexpected gains and losses. Many institutional investors, such as hedge funds and mutual funds and multinational companies, use currencies, futures, options or other derivatives to protect themselves from risk.
In response to the Latin American crisis in the 1990s, foreign exchange risk management began to gain attention, when many countries in the region had foreign debt that exceeded their ability to generate and repay income. The Asian currency crisis, which began in 1997 with the collapse of the Thai baht, continued to focus on currency risk in the years that followed.
How to use Currency risk in a sentence?
- Currency risk is the risk of losing money due to negative currency fluctuations.
- Companies and individuals operating in foreign markets face the risk of currency.
- Institutional investors, such as hedge funds and mutual funds, as well as large multinational companies, protect the foreign exchange risk in the foreign exchange market and with derivatives such as futures and options.
Meaning of Currency risk & Currency risk Definition