MANAGEMENT

Detailed explanation-1: -Exchange rate risk refers to the risk that a company’s operations and profitability may be affected by changes in the exchange rates between currencies.

Detailed explanation-2: -What Is Currency Risk? Currency risk, commonly referred to as exchange-rate risk, arises from the change in price of one currency in relation to another. Investors or companies that have assets or business operations across national borders are exposed to currency risk that may create unpredictable profits and losses.

Detailed explanation-3: -When exchange rates change, the prices of imported goods will change in value, including domestic products that rely on imported parts and raw materials. Exchange rates also impact investment performance, interest rates, and inflation-and can even extend to influence the job market and real estate sector.

Detailed explanation-4: -But why do currencies fluctuate so often? The answer is relatively simple; supply and demand. The definition of supply and demand is ‘the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.