Does exchange rate of currency effect export business?

 

The information provided here is part of Online business guide course

 

 Does exchange rate of foreign currency with local currency affect export business?

   

Let us discuss, how does change of exchange rate of currency effect export business?

 

Your buyer sent you a purchase order in January, for 24 containers to ship 02 containers each month. The price fixed as USD 20,000 per container and total of USD 480000 for 24 containers. You have quoted the rate as per the exchange rate of Does exchange rate of currency effect export businessJanuary, but the shipment period is through out the year till December. Your term of payment is 60 days from the date of bill of lading. Means, you have agreed a credit limit of 60 days from the date of shipment. In this case, you will start receiving your payment from March onwards till February of next year. Here, the exchange rate of this month may not be for next month. In short, certainly there would be a difference in exchange rate of March to February of next month. So, when converting USD in to your country’s currency, you can anticipate loss in business also.

 

How to overcome such risk of variation of exchange rates in Exports and Imports?

 

There are some solutions to solve risk in variation of exchange rates in exports and imports. One of them is to open an EEFC – Exchange Earners Foreign Currency account with your bank. Here, you are maintaining a foreign currency account in your name where in you can convert to your currency as and when you require.

 

Another method to prevent loss in variation of exchange rate is to enter overseas business contract to pay amount in local currency. Here, your buyer/importer buys – converts - your domestic currency and remits amount to you in your local currency. You need to make clear about these arrangements before entering in to the business contract.

 

Hope, you have satisfied with the above example, variation of exchange rates of foreign currency effects export import business. Do you wish to add more information about variation of exchange rates of foreign currency and its impact in export and import trade?

 

Also Read:   Commercial risks and solutions under Export Business    Political risks in International Trade   Risks arising out of foreign laws in Import Export Business   Cargo risks under Imports and Exports    Types of Policies to cover credit risks in Import Export Trade   Causes influencing price of export goods in Export Trade   Credit risks and solutions under International Business   Foreign exchange fluctuations risks and solutions in import export Business   How to overcome the credit risk in an export business?    Marine Insurance policies   Risks and solutions in Export Business

 

Write below your experience in handling variation of exchange rates in foreign currency and its impact in international trade.

 

 

Comment below your thoughts on this subject - Does variation of exchange rate in foreign currency affect export business?

 

    

 

The above information is a part of Guide on howtoexport and import 


Other details on how to import export 

 

EEFC Account. Exchange Earners Foreign Currency Account
Exchange rates in the field of exports
Difference between SOFTEX and GR forms
Difference between BRC and FIRC
Disadvantages of LC (letter of Credit) to Importer.
How to cover the risk of Cargo loss or damage
Excise and Customs - Click here to read complete notification under Budget 2014
How to get Export Orders?
How to settle dispute in Exports and Imports?
Click here to know India Trade Classification(ITC)
Pre shipment bank finance to suppliers for exports through other agencies
Types of export containers
Measurement of export containers
Export Import Policy of India 2015-2020
MEIS, Merchandise Exports from India Scheme
SEIS, Service Exports from India Scheme
Merge your Commercial Invoice and Packing List for all your future exports
Export procedures and documentation

 

What is Tail Gate exam hold in US import clearance
How to make DA mode of payment safe
How to make delay in delivery of Shipment?   
How to obtain a duplicate BL, if original bill of lading lost.
How to obtain GSP - Certificate of Origin?
How to obtain Phyto sanitary certificate. What is phytosanitary certification
What is THC - Terminal Handling Charges
What is the difference between BAF and CAF
What is the difference between High sea sales and imports
What is the difference between re-exports and re-imports
Transhipment - A redefinition
Types of Insurance Documents

Travelers to India under import duty exemption, Frequently Asked Questions Part 2

Triangular export

 Triangular shipment

Types of Insurance Documents.

What is the earliest date can be mentioned on Bill of Lading. Can BL date and let export date be same day?

What is the Procedure for importing goods through Post offices in India

What is Third Party Exports? Difference between manufacturer exporter and third party exporter.

What is VACIS exam in US import customs clearance

When can an exporter release bill of lading from shipping company?

When does exporter get EP copy of shipping bill after customs clearance

Which category of exporter are you? Merchant Exporter,Manufacturer exporter,Service exporter Project Exporter or Deemed Exporter

 How to make DA mode of payment safe

How to make delay in delivery of Shipment?

 How to minimize import cargo clearance time? An open logic proposal to WTO

How to obtain a duplicate BL, if original bill of lading lost.

How to obtain GSP - Certificate of Origin?

How to obtain Phyto sanitary certificate. What is phytosanitary certification

 How to obtain waiver on detention/ demurrage on imported goods/container from Shipping company/CFS

Transferability of Bill of Lading

Transhipment - A redefinition

Travelers to India under import duty exemption, Frequently Asked Questions Part 2

Triangular export

 Triangular shipment

Types of Insurance Documents.

 Import General Manifest (IGM)

Importance of Bill of Lading

Introduction to this web site.

 Is Airway bill a documents of title?

 Is Customs House Agents (CHA ) required to be appointed mandatory?

Transferability of Bill of Lading

Transhipment - A redefinition

Travelers to India under import duty exemption, Frequently Asked Questions Part 2

Triangular export

 Triangular shipment

Types of Insurance Documents.

 Is DP terms of payment safe in export business?

Is Letter of Credit LC safe for an Importer?

 Is ON BOARD CERTIFICATE required for LC negotiation

Who can inspect import cargo in US
Who decides shipping carrier on FOB shipments
Who gets benefits from this website?
Who is a ‘Manufacturer’ of excisable goods
Who is a prime banker to check authenticity of letter of credit?
Who is Stevedores
Who receives the amount of auctioned / resold imported unclaimed/un-cleared goods?
Why demurrage/detention waiver period is required at destination for import Transferability of Bill of Lading
Why do carriers balance weight and volume while charging freight amount in Exports?
How does CENVAT Credit work?
Why, best attention while preparing Export Invoice?
Is Letter of Credit LC safe for an Importer?



Comments


suhas krishna: Forex hedging is also one method where risk of fluctuation can be minimised.

VENKATACHARI SRINIVASAN : I visited website " howtoexportimport.com" and found the contents of the site interesting and also extremely useful. I'm working in an engineering/manufacturing organization. We have an export order for supplies of engineering products. For the mfr of the export goods we applied and obtained advance license ( for duty free imports of raw materials). The export obligation under the license is denominated in US$. However the contract for exports is denominated in US$/JPY/Euro/INR. As the commercial invoice for realizing proceeds of exports would in the contract currencies as stated above how will the shipping bill be prepared indicating the value of exports in equivalent US$ if the unit rate and item value is combination of multiple currencies such as US$/JPY/Euro/INR. More over the shipping bills would be of the draw back type applicable for obtaining drawback. In this case can the shipping bill be filed in manual mode instead EDI. If the shipping bill value could be in equivalent INR how will the currencies in the invoice converted in equivalent US$.

Admin: Hi Venkatachari Srinivasan, Contact DGFT, Director General of Shipping against your query.

brijesh raval: i m sending u email becoz i have some problem in my export deal ..i m very small exporter n beginner in this field so manythings i dont knw about RBI and FEDA etc..i did shipment of 15000 pcs of tshirts order from Oman.. my buyer send me money from oman in 5 different transaction. he send me money from SBI , Oman branch.this payment comes to my account as NEFT throew SBI global link Service, Mumbai..my bank is not ready to accept this NEFT as remitance.i did export n i have shiping documents with me...now My bank HDFC is saying that i personaly deal with SBI global link service and get FIRC otherwise my export will not complete.i already receive drawback from customs but problem is that i dont know for submitting shipping document i need to submit FIRC to my bank..i talk to SBI global link sevice , mumbai but they r saying that if ur bank request us then we will provide then remittance details but FIRC will be issued by HDFC bank only.so.. sir, kindly advice me in this cases what to do? expecting cooperation from u.

Balraj: Dear sir, Please explain about Forward Cover Booking with examples. Regards Balraj

venkat: Dear Admin, I need to clarify, export invoice can be raised in currency INR or IDR ( Indonesian rupiah), if there is any procedure to inform in case we are exporting to other country like, Indonesia , Malaysia in INR. Kindly explain

Discussion Forum

You can also share your thoughts about this article.
Any one can answer on question posted by Readers