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Hello
Could you confirm the risk category that fluctuations in exchange rates fall into?
I have always thought it to be a financial risk but recently have seen it classified as economic risk?Thanks
It is both.
If, say the US$ weakens with respect to the £, UK exporters to the US will suffer if their exports are defined in $.
At the same time, the weaker $ will make imports to the UK from the US cheaper and this poses economic risk (ie stiffer competition) to UK manufactureres and suppliers of similar goods
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