Currency risk

Currency risk is the chance that fluctuations in a foreign exchange rate will negatively impact the valuation of a financial instrument or other assets. This is a particular concern for securities that are denominated in a foreign currency, as well as when an entity has operations in a foreign location. A business can mitigate currency risk through ongoing hedging activities to offset exchange rate fluctuations, as long as the related costs are reasonable.

Currency risk is also known as exchange rate risk.

Related Courses

Accounting for Derivatives and Hedges 
Enterprise Risk Management  
Foreign Currency Accounting