should the foreign currency appreciate it will cost more in the business s home currency translation risk focuses on the change in a foreign held asset s value based on a change in exchange rate between the home and foreign currencies 
hedging translation riska variety of mechanisms are in place that allow a company to use hedging to lower the risk created by translation exposure companies can attempt to minimize translation risk by purchasing currency swaps or hedging through futures contracts in addition a company can request that clients pay for goods and services in the currency of the company s country of domicile this way the risk associated with local currency fluctuation is not borne by the company but instead by the client who is responsible for making the currency exchange prior to conducting business with the company 