When the foreign currency denominated assets and liabilities are held, by the banks or the business concern, two types of risks are faced. Firstly, the risk that the exchange rates may vary and the change may affect the cash flows or profits. This is known as exchange risk. Secondly, the interest rate may vary and it may affect the cost of holding foreign currency liabilities. To know more about forex market and be profitable with your trading join TryMarkets.
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