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  • Items proposed for consideration at the next meeting of Dispute Settlement Body December 18, 2019
    The WTO Secretariat has circulated a meeting notice and list of items proposed for the next meeting, on 18 December 2019, of the Dispute Settlement Body, which consists of all WTO members and oversees legal disputes among them. The meeting notice is circulated in the form of a document officially called an “airgram”.
    WTO
  • Report shows trade restrictions by WTO members at historically high levels December 12, 2019
    The Director-General’s annual overview of trade-related developments discussed on 12 December at a meeting of the Trade Policy Review Body shows that trade restrictions by WTO members continue at historically high levels. Between mid-October 2018 and mid-October 2019, the trade coverage of import-restrictive measures implemented by members was estimated at USD 747 billion. This is […]
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  • Ukraine launches safeguard investigation on syringes December 11, 2019
    On 11 December 2019, Ukraine notified the WTO’s Committee on Safeguards that it initiated on 2 December 2019 a safeguard investigation on syringes.
    WTO
  • Appellate Body issues report regarding Moroccan duties on Turkish steel December 10, 2019
    On 10 December the Appellate Body issued its report in the case brought by Turkey in “Morocco — Anti-Dumping Measures on Certain Hot Rolled Steel from Turkey” (DS513). On 4 December Morocco notified the Appellate Body that it had withdrawn its appeal in this dispute.
    WTO

Currency Risk Management



 

 

International Trade transactions could generate a currency risk exposure. This is especially so when an Exporter accepts to be paid in a foreign currency. Indeed, since the time span between the sales contract is signed and the payment is made, could take several weeks or months, the foreign currency is likely to fluctuate in the meantime and impact (favourably or adversely) the final amount received by the Seller when currency exchange has been translated in the domestic currency.

In much the same way, an Importer who accepts to pay a given amount denominated in a foreign currency is exposed to currency adverse movements.

In short, we can see that the seller and the buyer have conflicting interests, since the Exporter is exposed to the depreciation of the foreign currency that he will receive, while the Importer is exposed to the appreciation of the foreign currency in which he must honour a payment.

One way to get around this problem could be to require an upfront payment in the local currency. However it goes without saying that this option is somehow business-unfriendly, to say the least. In addition, granting extended payment terms might be the only way to conquer new markets.

Fortunately, this risk can be managed by using the appropriate hedging solution.

Overall, two types of hedging tools are available in International trade: Internal and External hedging techniques.

 

Please click on the links below for a detailed explanation of each technique