changes in the exchange rate of the critical content

Currency risk

Determined exchange rate uncertainties transactions of companies, investors and individuals. Uncertainty about the future exchange rate developments have an impact on increasing the transaction costs for investors and the braking effect of international capital and goods. Of particular importance is the currency risk - simply defined as the probability of a change of course redound to the detriment - of course, for export companies.

In essence, it is so that uncertainty arises when the transaction is in foreign currency exchange back to the time difference is marked and it's flexible exchange rate relationship. Insecurity has increased in the same manner as the exchange rate volatility (exchange rate as frequent and large movements up and down).

Although changes in the exchange rate of the critical content of all transactions in forex trading, and other areas somehow against exchange rate risk to protect: is the name of first place in this context, the word "hedging" in the special protection businesses such as currency swaps and options transactions are known. Another possibility is entering into hedging transactions in the futures market contract. A reduction of currency risk can also be achieved by relocation of the factory or financing through the capital market in foreign currency area. Thanks to the transfer of assets and liabilities in the same Fremwährung one often talks of "natural hedge". Ledigich one of the advantages of trading partners, however, to resolve billing realization of transactions in local currency.