Country Risk

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.

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