Foreign Exchange Fluctuation Risks in Export Import Trade

 The information provided here is part of Export Import Online Tutorial 

Risks and solutions in export business copyForeign Exchange Fluctuations Risks in International Business

I have written a couple of articles about exchange rate fluctuations in export import business in this web blog. I am providing links of those articles also below this article. You can go thorough those articles also to have more information about exchange rate fluctuations in foreign market and its impact in international business.

Normally export invoices are made in foreign currencies. If the exporter has invoiced as buyer’s currency, he will be subjected to risk of foreign exchange fluctuations. If the foreign currency depreciates in terms of currency of domestic country of exporter, exporter will receive lesser amount in terms of such currency of exporter’s country. In the same circumstances, if the exporter’s currency depreciates, exporter stands to gain.

If the exporter negotiated his documents with bank under Letter of Credit, the bank will be bearing the risk. However, if the exporter has sent the bill for collection, the exchange rate on the date of receipt of foreign currency in India will be given to the exporter. If export bill has discounted (purchased) also bank absorbs such exchange rate fluctuation as exporter already received his amount immediately up on such purchase. If there is intervening difference in the exchange rate between the date of giving the bill for collection and the date of realization, exporter stands to lose or gain, depending on the trend in fluctuation.

There will be no foreign exchange risk in case the invoice is made in Indian rupees. In such a case, the importer will be subjected to foreign exchange fluctuation risk. Apart from the above, exchange rate fluctuations. You may also read my similar articles about exchange rate fluctuation risks and its impact to exporters and importers in international business. Click here to continue - How to overcome the credit risk in an export business? Does exchange rate of currency effect export business?

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   How to overcome the credit risk in an export business?   Does exchange rate of currency effect export business?    Marine Insurance policies    Risks and solutions in Export Business

In this article, I have explained about fluctuation of foreign currencies and its impact on import export business. I request you to share your experience in facing such exchange rate fluctuations of foreign currencies and its impact in import export trade of international business. You can also add more information about solutions under foreign exchange fluctuations under import export trade.

 

Comment below your thoughts about this article - Foreign Exchange Fluctuations Risks

The above information is a part of Import Export Training online

Posts about export import online training

What is crystallization of export bills? How does delinking of export bills work?
Liquidation of Bank pre shipment finance to exporters
Running account facilities for bank export finance
Pre shipment bank finance to suppliers for exports through other agencies
Conditions to get export loans from banks to sub suppliers
Are construction projects eligible for Bank pre shipment loan?
Bank Packing credit to exporters of Floriculture, Grapes and Other Agro-based Products
What is Bank post shipment credit to exporters?
Period of post shipment credit by bank to exporters
Bank finance to exporters as pre shipment finance
Click here to go back to INDIAN BUDGET 2014-2014 highlights
Excise and Customs - Click here to read complete notification under Budget 2014
Service Tax - Click here to read complete notification under Budget 2014
Difference between FCL and LCL
Does exchange rate of currency effect export business?
Consequences of wrong declaration of weight
How to cover the risk of Cargo loss or damage

Types of export containers
Measurement of export containers
Export Import Policy of India 2015-20
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

Union territory tax (Rate) Notification No. 46 of 2017 DT 14th November, 2017, GST

Integrated Tax (Rate) Notification No. 49 of 2017 DT 14th November, 2017, GST

Central Tax Notification No 40 of 2017 dt 13th October, 2017 under GST

CUSTOMS Notification No. 77 of 2017 dt 13th October, 2017

Integrated Tax Notification No. 10 of 2017 DT 13th October, 2017, GST

Union territory tax (Rate) Notification No. 41 of 2017 DT 14th November, 2017, GST

Integrated Tax (Rate) Notification No. 44 of 2017 DT 14th November, 2017, GST

Central Tax Notification No 48 of 2017 dt 18th October, 2017 under GST

CUSTOMS Notification No. 83 of 2017 dt 31st October, 2017

Central Tax (Rate) Notification No 34 of 2017 dt 13th October, 2017 under GST


Comments


Vipin Raj: Dear Sir, First of all I would thank you for this wonderful effort of sharing your knowledge. Am new in Export field and working in Documentation Dept. We are doing Food products Exporting. It's been so nice to read your notes which helped me a lot in this. Your notes are really educative and easy to understand with examples. I really appreciate your effort. Thank you Sir. regards Vipin Raj Mob # 91-9567668767

Aniket: hello Sir, im a beginner in Import and export field. your articles are helping me alot in getting the clear idea about I&E docs, nature of market, problems faced by importer and Exporter and of course the solution. thank you. please help me in knowing the carrier opportunities if i'll start with documentation.

Hitesh: very good article...thanks for

Niraj Hattangdi: Dear Sir, This is indeed one of the most useful article I have come across. Thank you for sharing.

SUJIT MENON: DEAR SIR, WE ARE IN EXPLORING THE OPPORTUNITIES TO START A EXPORT VENTURE.I WOULD LOVE TO KNOW MORE ABOUT THE ECONOMIES OF COUNTRY LIKE RWANDA WHERE THEIR CURRENCY VALUE IS LESS THAN OUR AND IN THIS SECENARIO HOW CAN WE MAKE PROFIT OF FOREIGN EXCHANGE. HOW TO ASSESS SUCH TYPE OF ECONOMY.

SHAVIR: .I IAM IMPORTING MARBLE ROUGH BLOCKS FROM IRAN THROUGH AN TRADER IN DUBAI.WHEN AN SWITCH BILL IS PRODUCED FROM DUBAI TO INDIA (ME) WHAT SHOULD BE THE PORT OF LOADING NAME MENTIONED ON THE SWITCH B/L. THE MATERIAL PRACTICALLY IS GETTING SHIPPED FROM PORT OF IRAN TO PORT IN INDIA.

Admin: Hello SHAVIR, You may read information in this website about TRIANGULAR SHIPMENT PROCEDURES.

Yashu Jangra: Dear Sir, Thanks a lot to share such useful information with us but still I am not sure what is the risk in exchange fluctuation risk.according to me it is due to different currency power or in other words we can say different rate of currency... isn't it ? Kindly correct if I am wrong. Thanks and regards, Yashu Jangra

Discussion Forum

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