Engaging in foreign exchange comes with several risks:
Exchange Rate Risk: The risk of adverse currency movements affecting business profitability. Interest Rate Risk: The risk that changes in interest rates will affect currency values. Credit Risk: The risk that a counterparty may default on a contract. Country Risk: The risk associated with political or economic instability in a foreign country. Liquidity Risk: The risk that an entity may not be able to quickly convert currency into cash without significant loss in value.