hi,

i would like to ask that when i calculate my proforma invoice and convert my FOB value of domestic currency in a foreign currency i take the current foreign exchange rate into consideration. I would  get into loss when i receive the payment after shipment in foreign currency, if the exchange rate is low then it used to be when i quoted the price.

So, is there any way for supplier to be certain that they get the exact amount of payment when converted the foreign currency into domestic currency irrespective of fluctuation in exchange rate or should one quote the value of exported product in domestic currency leaving the conversion of currency to importer. Plz help.

There is no such way.


Nevertheless there are ways you can make safer, so for example you could give your quotations a short validity time, or you can include a clause in which you modify your prices over/below a certain exchange rate without prior notice.

However, once you have acknowledged an order by a certain date, you have no possibility to change your prices (it would be highly unethical anyway).


Other, I have heard about this but I am not sure, there are foreign trade insurance companies where you can have insurance against exchange rate volatility (this is only economical with large amounts of money and long shipping times, or long-term sales contracts). I know about one such company in my country, MEHIB.


Or, just raise your prices by a few percents.


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Thanks for your reply. As i am new to export. So, if i calculate my price so which rate of exchange to consider like buying or selling rate as selling rate is always more than buying rate. If i use a selling rate to convert my domestic price into US dollars and  when the importer on sending the amount/bank transferring/converting the US dollar into my domestic currency consider buying rate which is low then again i wont get the same amount expecting to receive.


Second question is: At time of converting the domestic price into international currency, i would increase/decrease the current exchange rate to some level and then convert the domestic price into international currecny.


So plz suggest me what to do in both the situations?


waiting for reply.

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Quoting from [rounaq]:

hi,

i would like to ask that when i calculate my proforma invoice and convert my FOB value of domestic currency in a foreign currency i take the current foreign exchange rate into consideration. I would  get into loss when i receive the payment after shipment in foreign currency, if the exchange rate is low then it used to be when i quoted the price.

So, is there any way for supplier to be certain that they get the exact amount of payment when converted the foreign currency into domestic currency irrespective of fluctuation in exchange rate or should one quote the value of exported product in domestic currency leaving the conversion of currency to importer. Plz help.

You are not alone to face this problem many in the world if facing the same. Your question will solve many exporters like you. so please carry on with your solving your problem, which in return will solve many exporters problem

Quoting from [rounaq]:

hi,

i would like to ask that when i calculate my proforma invoice and convert my FOB value of domestic currency in a foreign currency i take the current foreign exchange rate into consideration. I would  get into loss when i receive the payment after shipment in foreign currency, if the exchange rate is low then it used to be when i quoted the price.

So, is there any way for supplier to be certain that they get the exact amount of payment when converted the foreign currency into domestic currency irrespective of fluctuation in exchange rate or should one quote the value of exported product in domestic currency leaving the conversion of currency to importer. Plz help.

for me. as my on opinion.. when im calculating my payment.. i always do the maximum rate.. for example... in our country the rate of USD before has reach 50 Pesos... and now our rate for USD is P47.48 = 1 USD.. since the value of the USD have reach a value of P50, so i adjust my calculations to 1USD = P50.. and yes before the exchange rate have reach 1USD= P52 but for me.. the P50 rate would be fine for me..


so try see whats the highest rate does your currency have reach..it better you adjust than to fix or lower your rate... ^_^