Currency fluctuation: protecting yourself
Author: Resources
The pitfalls of currency fluctuation as a small bsuiness.

by Tekle Sebhatu

Question:

I placed an order for 100 PSP Value Packs with Shecom k.k. Japan. The advertisement included a game called Ridge Racer. Just before the order was due to be dispatched I was told by Shecom k.k. that the game was NOT Included. I was offered an immediate TT refund which I requested in £UK as the £ had devalued against the $US. Shecom k.k. insisted I was to be returned the funds in $US, and it cost me £500 taking the money back into my UK account. As Shecom k.k. misadvertised? What is the legal road to take to compensate for my loss? Thank you

Answer:

Dear Sonsub: Currency fluctuation risk is most often what small importers and exporters neglect to consider when completing a transaction. Multinational companies have no problem with this because they use hedging techniques like forward, spot or swap contracts to protect against currency fluctuation. Small businesses are at a disadvantage because the cost associated (especially with forward contracts) can be high and, therefore, the value of the transaction might not justify it. In your question you did not specify the type of currency you used to pay the company. Say if you paid them in $US and you requested the refund in £UK, you took that risk and unfortunately you must take the responsibility. I hope that was not the case. As to your claim of “misadvertised” I suggest that you write them a friendly letter, explaining your losses and possibly to work out some settlement. Any legal action that you might consider taking could end up costing you and the company a bundle.

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