Currency risk
Exposure of an asset, liability or cash flow to movements between currencies.
Plain languagePractical exampleConnected reading
01
What is it?
Exposure of an asset, liability or cash flow to movements between currencies.
02
Why does it matter?
It can change company profit, debt capacity and investment returns in local currency.
03
How should it be read?
Match revenue, cost, debt, cash and hedges by currency.
04
Common mistake
Assuming every exporter benefits equally from currency depreciation.
A simple example
A company with dollar revenue and euro costs is exposed to both USD/TRY and EUR/USD.