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Beautiful and a good question and the matter of the Third World communities that do not have any economic, financial and political stability
Definition of the risk of foreign exchange rate: is a risky located on the profits resulting from the mismatch of assets and liabilities in currencies. The banks have ideally assets denominated in local and foreign currency, while their opponents may be denominated in a combination of the local currency and foreign currencies. These institutions are exposed because of the lack of harmonization of these high risk for foreign currency exchange rate (devaluation of the local currency).
There are exchange rate risks for investors and companies exporting or importing goods or services and making foreign investments can be affected by a severe financial consequences; but there are steps you can take to manage or reduce risk.
Economic life has evolved and developed with international relations, including trade and capital movement, but it will not be possible unless the currency dealing with these countries, and can this currency is the currency a two dealers can be a coin third country with economic weight quite a bit and here we are in the context of what is known as the process of exchange, this process, which has become indispensable, and this is what leads us to talk about the exchange rate, and how the latter affects the economic exchanges between the countries, and on the local economy of each country. The price of one country's currency is linked to the ever-growing gold exchange, foreign origins, and strongly the economy (gross domestic product, inflation ...).
There is another side, is the political variables, you can change the exchange rate or determined by an administrative decision (political), and are not reflect its purchasing power, as is the case in Turkey and some other countries, or what was done by Sudan recently, replacing the dinar new unit equal to ten dinars old (like zero omitted). It is worth noting that the demand for foreign exchange is derived demand, not a request for exchange with that, as the international trade creates a need to sell, buy or borrow foreign currency. For example, when the local businesses to export their products to Japan, which is priced in yen or in local currency or perhaps priced in the currency of another country, any pricing in the currency of a third British pound or the euro, for example, the payment can be within one of the cases below:
If the sales are priced in Japanese yen, the importer then will convert the amount to the exporting facility, which in turn converts the yen to the local currency, any sale of the Japanese yen against the local currency.• If the sales are priced in the local currency, in this case must imported Japanese Yen convert to the local currency and then converted to the facility exported.• If the sales were priced in a third currency, the euro, for example, the Japanese importer will convert the yen into euros to pay back the value of sales to the facility exported, which will in turn transform the euro into the local currency.
Keep track of daily exchange rate.
Hedging is another option.
Risk is inevitable hence broad planning is enough.
For daily management, check the trend in exchange rate using a software and always go by the strategy “BUY LOW and SELL HIGH” to maximize profit.
I agree with Mr georgei answers, thanks for the invitation. .....
agreed with the answers Mr. George
Thanks for the invitation and I agree with the experts answer
I agree with the answers above and have nothing to add but to rely on software to lessen my own ability for error in analyzing figures on monitoring the exchange rates over time.
On that basis I shall make my financial forecasting to improve decision and reduce risk.
Primarily to save the balance sheet from devaluation and secondarily to boost up valuation.
agree with mr. georgei
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Thank you for the invitation agree with the answer, Mr. Georgy
