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Foreign 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
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