Question

- What is exchange rate risk?                 

a. Explain how a soft currency restricts foreign direct investment.                      

b. Explain how it is possible for a country to not have its own currency.       

Answer 1

1.Exchange rate chance (Called FX risk or cash chance) is a hazard that exists when a money related exchange is named in a cash other than that of the base cash of the organization (the nation in which organization is headquartered). So for instance, if a firm has liabilities or receivables in cash other than its own base money, at that point there will dependably be the danger of the difference in exchange rate between the two monetary forms.

2. A Soft cash is unified with an esteem that varies, comparitively lower, because of the nation's political or monetary vulnerability. Because of the of this current money's precariousness, outside exchange vendors will in general dodge it. In budgetary markets, members will frequently allude to it as a "Weak money or weak currency"

I have answered 2 questions. Please request again for further help.