1. Exchange rate risk is one of a series of risk factors that affect the investment income of overseas funds. If the stock held by investors is denominated in foreign currency, when this currency depreciates against the US dollar, investors will get lower returns when the exchange rate is stable or appreciated relative to this currency.

2. Exchange Risk, also known as foreign exchange risk, refers to the possibility that an economic entity will suffer losses due to exchange rate changes in its economic activities of holding or using foreign exchange.

3. Exchange rate risk can be divided into transaction risk, translation risk (accounting risk) and economic risk (business risk).

Exchange rate risk in transactions denominated and received in foreign currency, the possibility of economic entities suffering losses due to changes in foreign exchange rates. Trading risks mainly occur in the following situations:

(1) Import and export risks of goods and services.

(2) Risk of capital input and output.

(3) Risks of foreign exchange positions held by foreign exchange banks.

Translation risk, also known as accounting risk, refers to the possibility of book losses caused by exchange rate changes when economic entities convert the bookkeeping base currency into bookkeeping base currency in the accounting treatment of balance sheets. The bookkeeping base currency refers to various currencies used in circulation in economic entities and commercial activities. Bookkeeping functional currency refers to the reporting currency used in the preparation of consolidated financial statements, usually the local currency.