The contribution of currency risk measures the risk incremental to foreign asset risk from currency risk and is the difference between the asset risk in domestic currency terms and the risk of the foreign asset in foreign currency terms. To obtain the contribution of currency risk, we must first calculate the risk of the asset in domestic currency terms. To obtain the risk of the asset in domestic currency terms, we use the formula for portfolio risk that considers the risk of the asset in foreign currency terms, the risk of the foreign currency, and the correlation between the two:

σ_$² = 0.35² + 0.11² + 2(0.35)(0.11)(0.1) = 0.1423

σ_$ = √0.1423 = 0.3772 = 37.72%

Contribution of Currency = 37.72% - 35.00% = 2.72%