Foreign Exchange Risk

 

Foreign-exchange risk is the risk that an asset or investment denominated in a foreign currency will lose value as a result of unfavorable exchange rate fluctuations. The exchange rate fluctuations between the investment’s foreign currency and the investment holder’s domestic currency may cause this foreign exchange risk.

The reason for foreign exchange rate risks is that exchange rates are not predictable. Any movement of it may cause gain or losses for holders of foreign currency denominated assets.

December 6, 2017
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