Foreign Exchange And Risk Management By C Jeevanandam Pdf

Foreign exchange risk, also known as currency risk, is the risk of financial loss due to fluctuations in exchange rates. It arises when a company or individual has assets or liabilities denominated in a foreign currency. There are three types of foreign exchange risks:

Transaction exposure refers to the actual cash flow impact of currency fluctuations on obligations that are already on the books. For example, an Indian company importing machinery from Germany faces the risk that the Euro will appreciate before payment is due, increasing the cost in Rupees. foreign exchange and risk management by c jeevanandam pdf