Is there a risk associated with foreign exchange trading?

Yes, trading in currencies involves several different risks that it is essential to be aware of:

Exchange rate fluctuations: Currency rates can change quickly due to economic news, political decisions, or shifts in market expectations.

Liquidity risk: Not all currencies are traded equally. In less liquid markets, it may be harder to buy or sell without affecting the price.

Interest rate risk: Changes in interest rates between countries can significantly impact currency rates.

Geopolitical risk: Political crises, trade conflicts, or natural disasters can create unexpected fluctuations.

Learn more about how we at kompasbank can help you understand, manage, and hedge currency risk when trading with customers and suppliers abroad here.