What is the risk called that pertains to the fluctuations in the value of the U.S. dollar against other currencies?

The risk associated with fluctuations in the value of the U.S. dollar against other currencies is known as Currency Exchange Risk. This risk arises specifically because the exchange rates between currencies can vary significantly over time, affecting the value of investments made in foreign currencies or the performance of a company's operations in different countries.

When a U.S. investor holds assets denominated in foreign currencies, changes in the exchange rate can lead to gains or losses when those assets are converted back into U.S. dollars. For example, if the value of the dollar strengthens against a foreign currency, the value of the assets in that currency will decrease when exchanged back to dollars, resulting in a loss for the investor.

This concept is crucial for businesses engaged in international trade or investment, as failure to properly manage Currency Exchange Risk can lead to substantial financial impacts. Understanding this risk helps investors and businesses make informed decisions about foreign investments and can also lead to the use of hedging strategies to mitigate potential losses due to currency fluctuations.