Sovereign Risk

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Sovereign Risk is the additional risk assumed by investors with funds invested in foreign countries. Sovereign risk includes currency translation losses, default of foreign governments on debts and appropriation of company assets by foreign governments.^[1]

In futures trade, this term often comes up in reference to the risk that a central bank will impose foreign exchange regulations that will reduce or negate the value of foreign exchange contracts.^[2]

References

1. ↑ Glossary. BusinessWeek.com. Retrieved on March 24, 2008.
2. ↑ Glossary. ADVFN USA. Retrieved on March 24, 2008.