Management Glossary

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currency risk

When a company conducts business — make sales, buy goods and/or services, borrows money and/or lends money — in multiple currencies, there is a risk that the exchange rate between the currency that the business is conducted in and the company's home currency will change between the time the deal is done and the time money changes hands. In the absence of an agreement to adjust the contracted amounts in order to compensate for this exchange rate variance, a company may be negatively impacted by the change. This risk is the currency risk.

Contributed by: Managerwise Staff
See: operational risk, credit risk, market risk

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