Foreign exchange risk, also known as exchange rate risk, is the risk of financial loss that arises from fluctuations in the exchange rates between currencies. This risk specifically affects businesses and investors who have financial transactions, liabilities, or assets denominated in a foreign currency.some text
Example: A U.S.-based electronics manufacturer, TechCorp, imports components from a supplier in Germany. There is a risk that the euro may become more expensive due to changes in the exchange rate.
