What is a Currency Risk?
Currency risks represent the degree of potential that any given investment or adjustment to the business operations of a company could be impacted by some change in exchange rates. The exact nature of the currency risk could be considered to be very low and thus well worth the risk in light of the chance for a high return. At the same time, a currency risk that is considered to be somewhat high could be sufficient reason to hold off on making the investment or implementing the change to the business operation. Sometimes referred to as an exchange rate risk, the currency risk often involves the task of converting one type of currency into another type of currency in order to engage in a given investment. For example, a company may be considering the purchase of a competitor that is based in and operates primarily in a different country. When this is the case, it may be necessary to convert the currency used for the purchase into the type of currency used in the country where the purchas
