Trade finance is facilitating financial needs in international trades. It involves an exporter who requires immediate payment and an importer who looks for credit. It also reduces risks like currency fluctuations, non-payment issues, and creditworthiness in the international trade transaction. During the early days, exporters have never been able to make sure whether importers pay
In the currency markets, forward contracts are transacted over the counter like through the bank. There are two participants in a forward contract, these are hedgers and speculators. Hedgers don’t typically look for a profit however rather look to stabilize the revenues or costs of their business operations. Their gains or losses are normally offset
Exchange Rate is a price of domestic currency in the terms of foreign currency. In exchange rates there are two components in the exchange rates one is domestic currency and other is foreign currency. Exchange rates are quoted in direct or indirect. When a one unit value of foreign currency is quoted in domestic currency
Initially let’s know about Buyers Credit. Buyer’s credit is a short term credit available to the importer; it is availed by the Indian importers from foreign financial institutions and banks. They lend based on the letter of Undertaking or letter of comfort given by the importers banks, Importers bank coordinates with importers and foreign banks
Generally there are more strict regulations in international trade than domestic trade. The communication gap between parties, custom difference, risks of non-compliance, transaction exposure and financing are a burden on importers and exporters. For them to stay hassle free Export and Import Finance have come into picture. An exporter avails financial assistance for the funds
We have often heard the notion slow and steady wins the race. This applies to many aspects of foreign exchange markets as well. Foreign exchange can really work as a mode of earning profit provided one is aware about basic money management and works while keeping certain ground rules of Forex money management in mind.