valuutorisk

Valuutorisk, also known as foreign exchange risk or FX risk, refers to the potential for financial loss that an investor or company may experience due to fluctuations in the exchange rate between two currencies. This risk arises when an entity has assets, liabilities, or future cash flows denominated in a foreign currency.

There are several types of valuutorisk. Transaction risk occurs when a company has committed to a future transaction in a foreign currency. For example, an importer who agrees to pay for goods in a foreign currency at a future date faces the risk that the foreign currency may appreciate against their home currency, increasing the cost of the goods. Translation risk, also known as accounting risk, relates to the impact of exchange rate changes on the consolidated financial statements of a multinational corporation. When a company translates the financial statements of its foreign subsidiaries into its reporting currency, fluctuations in exchange rates can affect reported profits and asset values. Economic risk, or operating risk, is the broadest form and considers the long-term impact of exchange rate movements on a company's competitive position and future cash flows. A strong appreciation of a country's currency can make its exports more expensive and imports cheaper, potentially hurting domestic industries.

Companies and investors manage valuutorisk through various hedging strategies. These can include forward contracts, currency options, and currency swaps, which aim to lock in an exchange rate or limit potential losses from adverse currency movements. Diversification across different currencies and geographical markets can also help mitigate this risk.