Sovereign Risk

Dictionary Says

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 Says

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.

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