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■ CHAPTER 10 Currency Types and Risk: Hedging Transaction Settlement Risk

According to the CIA World Fact Book, there are 178 different currencies in use around the world. Each country or region (e.g., Eurozone) has its own currency. Entities that are domiciled in a given country or region employ the local currency as a medium of exchange and as a store of value and they may or may not use the same currency as a unit of measure. Most known currencies are convertible into one another at exchange rates that currency (FX) traders in world markets constantly renegotiate; while others are pegged to the US dollar.