Coursework "currency Risks"

The reasons of currency risk are short-term and long-term fluctuations of exchange rates of currencies which are predetermined by size of a supply and demand. Demand for purchase or sale of currency is under influence of a combination of short-term and long-term factors.

Long-term tendencies of change of exchange rates depend on a condition of economy. Short-term tendencies depend on market conditions and other short-term factors of demand-offer.

Long-term changes of exchange rates can be essential enough. As a whole such changes reflect a difference of rates of inflation of two parties, however and other factors can influence a rate. In the countries with a high rate of inflation the currency will be "weak", and its cost will quickly go down. The "firm" currency associates with strong economy.

Risk is the situational characteristic of activity of any manufacturer, including the bank, reflecting uncertainty of its outcome and possible adverse consequences in case of unsuccess.

The risk is expressed by probability of reception of such undesirable results, as losses of profit and