Quoting from [haho]:

Quoting from [derek pang]:

Dear Sir/Madam

I have recently started a new business importing goods from overseas. This is a new direction and unfamiliar grounds to me,. I have set up business account and found a supplier and buyer. I have also set up  L/C account for safe payment .

 I have agreed on the price of products ,how do i safeguard myself agaist the fluctuation of the currency on the day of agreed price to the day of releasing funds when i recieve my shipment documents?

I heard that there are few options like currency account and a forward contract what are these ? Please advise.

 

 

I have read your letter and I may understand what you are facing with.

Regarding to against the fluctuation of currency from the day of agreed the price and the day of your money is transferred. I would like to give you three option for your reference.

1. You should give the exchange rate between your currency and payment currency in the sales contract at the time you agreed the price. So when you transfer the money to the supplier you can apply the exchange rate is calculated into the sales contract

2. You can put the rate of fluctuation of exchange rate into the sales contract, if the exchange rate exceed the limited rate, you can sit down with the supplier to re-negotiate about the fluctuation of price caused by the exchange rate is changed

3. I know that you will apply the payment by LC so when you open LC, you have to deposite the payment about with your bank/ issuing bank so you should deposit the payment amount with the currency is similar with the currency you shall pay it for the Supplier.

Above words is my own opinion for your reference only. Hope that it will help you a little

 

 

 

thank you for your reply, i think i jumped the water too quick, is it too late for me now to change as l/c has been issued to supplier and now i am wating for shipment documents?

so do i need to put that condition in L/C or do i need to negotiate with supplier to put condition on the PI in future?

It is possible to "hedge" against currency fluctuations by buying a forward contract of dollars or what ever currency you are paying in. Effectively you lock the exchange rate at todays rate for the next three months.

But seek professional advice from your broker or bank before you do this as you must understand the risks involved.

Quoting from [derek pang]:

Quoting from [haho]:

Quoting from [derek pang]:

Dear Sir/Madam

I have recently started a new business importing goods from overseas. This is a new direction and unfamiliar grounds to me,. I have set up business account and found a supplier and buyer. I have also set up  L/C account for safe payment .

 I have agreed on the price of products ,how do i safeguard myself agaist the fluctuation of the currency on the day of agreed price to the day of releasing funds when i recieve my shipment documents?

I heard that there are few options like currency account and a forward contract what are these ? Please advise.

 

 

I have read your letter and I may understand what you are facing with.

Regarding to against the fluctuation of currency from the day of agreed the price and the day of your money is transferred. I would like to give you three option for your reference.

1. You should give the exchange rate between your currency and payment currency in the sales contract at the time you agreed the price. So when you transfer the money to the supplier you can apply the exchange rate is calculated into the sales contract

2. You can put the rate of fluctuation of exchange rate into the sales contract, if the exchange rate exceed the limited rate, you can sit down with the supplier to re-negotiate about the fluctuation of price caused by the exchange rate is changed

3. I know that you will apply the payment by LC so when you open LC, you have to deposite the payment about with your bank/ issuing bank so you should deposit the payment amount with the currency is similar with the currency you shall pay it for the Supplier.

Above words is my own opinion for your reference only. Hope that it will help you a little

 

 

 

thank you for your reply, i think i jumped the water too quick, is it too late for me now to change as l/c has been issued to supplier and now i am wating for shipment documents?

so do i need to put that condition in L/C or do i need to negotiate with supplier to put condition on the PI in future?

  i think it depends on the L/C you opened,  it could be negotiated with your supplier  if the L/C you opened is revocable L/C ,or it cannot.  Of course my idea is to you'd better put those condition ON PI in the coming orders, that will help you to avoid  getting loss in the future. it  is just my thoughts on this article, hope it would help you out  somewhat.

Quoting from [derek pang]:

Quoting from [haho]:

Quoting from [derek pang]:

Dear Sir/Madam

I have recently started a new business importing goods from overseas. This is a new direction and unfamiliar grounds to me,. I have set up business account and found a supplier and buyer. I have also set up  L/C account for safe payment .

 I have agreed on the price of products ,how do i safeguard myself agaist the fluctuation of the currency on the day of agreed price to the day of releasing funds when i recieve my shipment documents?

I heard that there are few options like currency account and a forward contract what are these ? Please advise.

 

 

I have read your letter and I may understand what you are facing with.

Regarding to against the fluctuation of currency from the day of agreed the price and the day of your money is transferred. I would like to give you three option for your reference.

1. You should give the exchange rate between your currency and payment currency in the sales contract at the time you agreed the price. So when you transfer the money to the supplier you can apply the exchange rate is calculated into the sales contract

2. You can put the rate of fluctuation of exchange rate into the sales contract, if the exchange rate exceed the limited rate, you can sit down with the supplier to re-negotiate about the fluctuation of price caused by the exchange rate is changed

3. I know that you will apply the payment by LC so when you open LC, you have to deposite the payment about with your bank/ issuing bank so you should deposit the payment amount with the currency is similar with the currency you shall pay it for the Supplier.

Above words is my own opinion for your reference only. Hope that it will help you a little

 

 

 

thank you for your reply, i think i jumped the water too quick, is it too late for me now to change as l/c has been issued to supplier and now i am wating for shipment documents?

so do i need to put that condition in L/C or do i need to negotiate with supplier to put condition on the PI in future?

1. Procuring a forward contract from a bank has nothing to do with an LC having been already issued. You can still ask for a fwd contract, if you think the rates are in your favour.
2. Whether you obtain a fwd contract or not has no relevance to an LC, nor with the supplier. It is strictly between you and your banker.