Foreign currency is also known as xenocurrency. Xenocurrencies are digital or physical currencies that are exchanged in markets outside of the country where the central bank issued them. Most modern financial experts avoid the potentially pejorative implications of the word xeno- by opting instead to use the term “foreign currency.”

Due to the complexities introduced by things like currency swings and conversion difficulties, investing in xenocurrencies can be a risky proposition. Foreign investment may result in reduced returns when converting funds back to the home currency if the domestic currency market is growing and the depositors are holding foreign currency. Nonetheless, investments made in depreciating home currency bear the opposite risk. These potential outcomes are often referred to as “foreign currency consequences.”

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