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CGMA BA1
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Textbook
Introduction
1. Goals and decisions of an organization
2. The market system
3. The domestic economy
4. Macroeconomics – The international economy
5. Macroeconomics – Index numbers
6. Introduction to the financial context of business entities
7. Foreign currencies
7.1 Introduction
7.2 Foreign exchange risks
7.3 Foreign exchange systems
8. Investment appraisal
9. Summarizing and analyzing data
10. Inter-relationships between variables
11. Time series model
Wrapping up
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7.1 Introduction
CGMA BA1
7. Foreign currencies
Our CGMA course is currently in development and is a work-in-progress.

Introduction

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We’ve already looked at different types of markets, including the foreign exchange market.

This chapter focuses on foreign exchange rate risk - what it is and why it matters for businesses. You’ll learn how to calculate and convert amounts from foreign currency to domestic currency (and the other way around). You’ll also be introduced to key factors that cause exchange rates to rise or fall.

Foreign exchange rate risk

  • Risk from fluctuations in currency exchange rates
  • Affects international business profits and costs
  • Can impact value of foreign investments

Currency conversion

  • Calculating domestic value from foreign currency (and vice versa)
  • Use exchange rate: Domestic Amount = Foreign Amount × Exchange Rate
  • Essential for international transactions and accounting

Factors influencing exchange rates

  • Supply and demand for currencies
  • Economic indicators (e.g., inflation, interest rates)
  • Political stability and market speculation
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Next  | 7.2 Foreign exchange risks
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Introduction

We’ve already looked at different types of markets, including the foreign exchange market.

This chapter focuses on foreign exchange rate risk - what it is and why it matters for businesses. You’ll learn how to calculate and convert amounts from foreign currency to domestic currency (and the other way around). You’ll also be introduced to key factors that cause exchange rates to rise or fall.

Key points

Foreign exchange rate risk

  • Risk from fluctuations in currency exchange rates
  • Affects international business profits and costs
  • Can impact value of foreign investments

Currency conversion

  • Calculating domestic value from foreign currency (and vice versa)
  • Use exchange rate: Domestic Amount = Foreign Amount × Exchange Rate
  • Essential for international transactions and accounting

Factors influencing exchange rates

  • Supply and demand for currencies
  • Economic indicators (e.g., inflation, interest rates)
  • Political stability and market speculation

More from Foreign currencies

  • Foreign exchange risks
  • Foreign exchange systems