Transaction Exposure

Transaction Exposure
The risk, faced by companies involved in international trade, that currency exchange rates will change after the companies have already entered into financial obligations. Such exposure to fluctuating exchange rates can lead to major losses for firms.

Often, when a company identifies such exposure to changing exchange rates, it will choose to implement a hedging strategy, using forward rates to lock in an exchange rate and thus eliminate the exposure to the risk.


Investment dictionary. . 2012.

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Look at other dictionaries:

  • Transaction Exposure — ⇡ Exposure …   Lexikon der Economics

  • transaction exposure — The risk that the cost of a transaction will change because of exchange rate movements between the date of the transaction and the date of settlement …   Accounting dictionary

  • Transaction exposure — Risk to a firm with known future cash flows in a foreign currency that arises from possible changes in the exchange rate. Related:translation exposure. The New York Times Financial Glossary …   Financial and business terms

  • transaction exposure — risk to a firm with known future cash flows in a foreign currency, that arises from possible changes in the exchange rate. Related: translation exposure. Bloomberg Financial Dictionary …   Financial and business terms

  • net transaction exposure — offsetting inflows against outflows in a given currency to determine extent of exposure to risk. Bloomberg Financial Dictionary …   Financial and business terms

  • Exposure at default (EAD) — is a parameter used in the calculation of economic capital or regulatory capital under Basel II for a banking institution. This is an attribute of any exposure on bank s client.DefinitionIn general EAD can be seen as an estimation of the extent… …   Wikipedia

  • Exposure — Begriff zur Kennzeichnung von ⇡ Währungsrisiken. Das Transaction E. bezieht sich auf bereits bestehende Forderungen und Verbindlichkeiten aus laufenden Transaktionen, die auf ausländische Währungen lauten und deren Werte sich durch eine… …   Lexikon der Economics

  • exchange-rate exposure — exchange rate risk; = foreign exchange rate risk The risk associated with uncertain exchange rates. The three types of risk are transaction exposure, translation exposure, and economic exposure …   Accounting dictionary

  • Translation exposure — Risk of adverse effects on a firm s financial statements that may arise from changes in exchange rates. Related: transaction exposure. The New York Times Financial Glossary …   Financial and business terms

  • translation exposure — risk of adverse effects on a firm s financial statements that may arise from changes in exchange rates. Related: transaction exposure. Bloomberg Financial Dictionary …   Financial and business terms

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