Sovereign Risk

AAA

DEFINITION of 'Sovereign Risk'

The risk that a foreign central bank will alter its foreign-exchange regulations thereby significantly reducing or completely nulling the value of foreign-exchange contracts.

INVESTOPEDIA EXPLAINS 'Sovereign Risk'

This is one of the many risks that an investor faces when holding forex contracts. Additionally an investor is exposed to interest-rate risk, price risk and liquidity risk amongst others.

VIDEO

RELATED TERMS
  1. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. ...
  2. Systematic Risk

    The risk inherent to the entire market or entire market segment. ...
  3. Sovereign Default

    A failure on the repayment of a county's government debts. Countries ...
  4. Swap Network

    A worldwide network of central banks that establish a reciprocal ...
  5. Country Risk

    A collection of risks associated with investing in a foreign ...
  6. Default

    1. The failure to promptly pay interest or principal when due. ...
Related Articles
  1. A Primer On The Forex Market
    Options & Futures

    A Primer On The Forex Market

  2. A Look At National Debt And Government ...
    Bonds & Fixed Income

    A Look At National Debt And Government ...

  3. Getting Started In Forex
    Options & Futures

    Getting Started In Forex

  4. Using Options Tools To Trade Foreign-Exchange ...
    Options & Futures

    Using Options Tools To Trade Foreign-Exchange ...

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center