2 min read
Definition
Foreign exchange risk arises when a business has revenues, costs or debts in a currency other than sterling, so exchange-rate movements between agreeing and settling a transaction alter its value.
In plain terms
Agree a price in dollars today, get paid in three months, and a shifting rate can quietly eat your profit — or hand you a windfall. Either way, it is uncertainty.
Why it matters for your company
Importers and exporters can hedge FX risk with forward contracts and matched-currency finance, protecting margins. It pairs with trade finance. See FX management in your planning.
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