Economic Exposure

The risk that a company’s finances is exposed to as a result of fluctuations in interest rates and exchange rates, especially when a component of the company’s operations has to deal with foreign exchange transactions or cross-border transactions. Usually, such a company that has economic exposure is one that has to regularly exchange the local currency for a foreign one, or borrow money from external financing institutions. In each case, there is a risk of economic exposure because of the floating nature of interest rates and exchange rates, so the entity stands to lose money by simple exchanges of money if the local currency weakens against the foreign one.

By |2018-09-04T14:22:57+00:00September 4th, 2018|0 Comments

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