The risk that a central bank will impose foreign exchange regulations that will reduce or negate the value of foreign exchange contracts. Also refers to the risk of government default on a loan made to a country or guaranteed by it. The government's part of political risk.
Nearby TermsSources and applications of funds statement South African Futures Exchange (SAFEX) Sovereign risk Sovereign Wealth Fund (SWF) SOXS
Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University