Foreign Exchange Risk
This is risk that foreign currency profits may evaporate in dollar
terms due to unanticipated unfavorable exchange rate
movements.
Suppose $1 = ¥100 and you buy 10 shares of Toyota at
¥10,000 per share. One year later the investment is worth ten
percent more in yen: ¥110,000.
But, if the yen has depreciated to $1 = ¥120, your investment
has actually lost money in dollar terms.