Credit risk

Credit risk associated with the risk of failure to meet contractual obligations to pay foreign exchange exposure due to voluntary or involuntary action of the second party. If there is such fear trade is in the form of forced transactions, as all traders agree with the Court of Auditors (clearinghouse). Known forms of credit risk:
1. The risk compensation (Replacement risk), which occurs when customers fail banks are at risk of running not to get compensation from the bank for a personal account imbalances.
2. Geographic risk that arises due to different time zones on different continents. For this reason, the currency can be sold
central banks of different countries at different prices at different times of the day. At the beginning of the world trade of the day sold the Australian and New Zealand dollars, then the Japanese yen, the European currency and the last one – the U.S. dollar. Therefore, there may, for example, occur premature payments favor of the party that intends to soon declare bankruptcy or soon to be declared insolvent.
Credit risk for the currencies that are traded on organized markets, minimize collateral credit customers. Commercial and investment banks, trading companies and bank customers should closely monitor the financial viability of their partners. Along with the market value of foreign exchange portfolios participants of transactions in order to avoid the risk, should also evaluate their potetsialnuyu cost. The latter can perform a probabilistic forecast spending for the duration of the open positions.