

Currency risk, also known as exchange rate risk, is the possibility of financial loss caused by fluctuations in foreign currency exchange rates. It affects businesses that import, export, borrow, invest, or make payments in foreign currencies.
Currency movements directly impact cross-border payments, vendor invoices, international purchases, foreign investments, and revenue earned in overseas markets. For companies dealing with USD, EUR, GBP, AED, or any other currency, sudden fluctuations can increase costs or reduce margins.
Finance teams monitor currency risk closely to manage:
Managing this risk is essential for protecting profitability and maintaining pricing stability.