Country risk refers to the government's interference in the foreign exchange markets and falls under the joint responsibility of the treasurer and the credit department.
The failure to receive an expected payment due to government interference amounts to the insolvency of an individual bank or institution, is a situation described under credit risk.
Outside the major economies, controls on foreign exchange activities are still present and actively implemented.
For traders it is important to know or be able to anticipate any restrictive changes concerning the free flow of currencies. If this is possible, though trading in the affected currency will dry up considerably, it is still a manageable situation.
To continue learning about the types of foreign exchange risks, click on the link below.
Return from Country Risk to Forex Risks.
And to skip it and go straight to get a deeper sense of what forex is all about, click on the link below.
Return to Foreign Exchange Center.