What could be a potential consequence of FX Economic Risk?

The potential consequence of FX Economic Risk is a reduction in a company's export competitiveness. FX Economic Risk stems from fluctuations in exchange rates that can affect a company's long-term profitability and performance in the international market. When a country's currency appreciates, its exports become more expensive for foreign buyers. This can lead to decreased demand for those exports, reducing the competitiveness of the exporting companies in the global marketplace.

As exchange rates shift, businesses that rely on exporting goods may find their products priced higher than those of competitors from other countries with weaker currencies. This scenario can lead to a decline in sales, market share, and ultimately, profitability for those exporters. Therefore, the direct impact of FX Economic Risk is closely associated with how it can hinder a company's ability to compete effectively on a global scale.