Who assumes the FX risk when a company prices a sale in its home currency?

When a company prices a sale in its home currency, it effectively shifts the foreign exchange (FX) risk to the buyer of the goods. This occurs because the buyer must convert their currency into the seller's home currency in order to complete the transaction.

If the value of the buyer's currency decreases relative to the seller's home currency during the period leading up to the sale, the buyer will have to spend more of their currency to acquire the same amount of goods. This potential for fluctuation in currency value means that the buyer assumes the risk associated with changes in exchange rates.

Thus, when transactions are priced in the seller's home currency, the buyer bears the risk of currency movements, making them responsible for any economic loss that might occur due to unfavorable exchange rate shifts. This highlights the importance of understanding how currency fluctuations can impact international trade and prices.