Hello,friends,

As a foreign trader,

I want to know how to avoid foreign exchange risk?

How to look at the pros and cons of RMB revaluation of the impact on China's economy?

thanks and regards,
Sophia

Replying to [Sophia 320]:
Hi Sophia,
Simple question, but most difficult to answer. India is facing the same situation now. The exporters are a worried lot because revaluation gives the exporter less of the RMB or INR than before. Importers are happy because they have to pay less.

This is unavoidable. You cannot have your country's economy improve on the one hand, but expect your currency to devalue, on theother hand! The stremgth of the economy is reflected in the external value of your home currency. You have to accept the situation and face it squarely.

One option for the exporter is to invoice in the home currency. The other is to choose not the USD (against which the home currency is appreciating) but another, say, Euro. Of course, this can be done only if both parties agree.

Another option is to obtain exchange risk cover from a commercial bank. An exporter can get a forward contract or an option contract to protect his/her costing, pricing and profit margin.

But these offer only short or medium term cover. If the currency keeps appreciating there is no safety from these products in the long term. Then you have to gear up your prductivity, efficency, supply chain management, etc. to improve competitiveness.

Quoting from [Sophia 320]:


Hello,friends,


As a foreign trader,


I want to know how to avoid foreign exchange risk?


How to look at the pros and cons of RMB revaluation of the impact on China's economy?


thanks and regards,

Sophia

That's easy, just make a term on contract stating that exchange rate to be calculate according to the final payment date.

Quoting from [Sophia 320]:

Hello,friends,


As a foreign trader,

I want to know how to avoid foreign exchange risk?

How to look at the pros and cons of RMB revaluation of the impact on China's economy?

thanks and regards,


Sophia

That's easy, just make a term on contract stating that exchange rate to be calculate according to the final payment date.

If it was THAt easy, there would be no such thing as a foreign exchange risk. I am afraid you did not  understand the question at all!

UK Based foreign currency exchnage company Tor FX provide far better rates of exchange than banks, transfers are free and funds are secured via Barclays Bank for all transactions. Let me know if you woiuld like to know and I can put you in touch with my contact

Recently,the Exchange Rate is stable,Rmb to USD.Be more careful on the big order and long term contract.That will be largely affected by the uncontroable money value.

learned a lot!
thanks!

Catalyst is correct. If you want to remove the risk of adverse currency movement, you have to take out a Forward Exchange Contract (FEC) with a bank. By doing this, you agree to buy or sell a currency at a fixed rate and at a fixed time in the future, so you can know exactly the conversion rate when you get paid.

A lot of stupid people of in west did not do this before the global financial crisis, and have spent the last 12 months working in their businesses for free