Introduction

As investment are increasingly interested in expanding overseas, their investments may be subjected to numerous risks that they wouldn't have necessarily encountered should they have not made the decision to go abroad. Normally investors may be subjected to three major risks; Political, Commercial and Financial risks. In terms of financial risk, investors could mainly be subjected to many threats one of which is currency exchange. For that, it is important to understand the true nature of this threat and to clearly distinguish between cases where this is regarded as a pure financial risk or as a political one. It is also of importance to understand how this risk could be a hybrid of both political and financial risks. To do so, this paper will resort to primary and secondary resources. Mainly, the paper will examine international treaties and two recent cases settled by ICSID. The first is the case of CMS v Argentina and the second one is Rusuro Mining v Venezuela. The paper will also examine the work of Rubins, Swan, Mora, Yescomb, Bishop and Saghir. Moreover, the paper will resort to news articles and peer-reviewed publications in order to prove the main hypothesis that exchange threat is one that could be considered as either a pure political risk, pure financial risk or as a political financial risk depending on the financial regulations of the host state and the amount of state intervention.