Foreign Exchange Risk
Cash may feel safe, but foreign-currency cash can still be volatile.
During global market stress, investors often rush toward the U.S. dollar. That can cause other currencies, especially higher-risk or commodity-linked currencies such as the Australian dollar, to fall sharply against the USD.
This matters because an investor may be “safe” in cash locally, but still lose purchasing power internationally. For example, AUD cash may hold its value in Australian dollar terms, while falling materially against the U.S. dollar during a global crisis.