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  • Items proposed for consideration at the next meeting of Dispute Settlement Body February 28, 2020
    The WTO Secretariat has circulated a meeting notice and list of items proposed for the next meeting, on 28 February 2020, 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
  • US donates USD 600,000 to further developing countries’ trading capacities February 25, 2020
    The United States contributed USD 600,000 (CHF 590,000) in 2019 to help developing and least-developed countries (LCDs) participate effectively in global trade negotiations. This donation will finance training workshops for officials from WTO member governments to help them deepen their understanding of multilateral trade rules and strengthen their negotiating capacity.
    WTO
  • Lithuania donates EUR 50,000 to enhance developing countries’ trading capacity February 24, 2020
    Lithuania is contributing EUR 50,000 (CHF 53,000) to help developing and least-developed countries take an active part in global trade negotiations. The contribution was acknowledged by Director-General Roberto Azevêdo at a meeting with Lithuania’s Minister of Foreign Affairs, Linas Linkevičius, on 24 February 2020.
    WTO
  • Third anniversary of Trade Facilitation Agreement sees increasing implementation rate February 22, 2020
    Three years since the Trade Facilitation Agreement (TFA) entered into force on 22 February 2017, WTO members have continued to make steady progress in its implementation. Director-General Roberto Azevêdo, on the occasion of the TFA’s third anniversary, welcomed members’ efforts to ensure traders can reap the full benefits of the Agreement.
    WTO

Exchange rate insurance



 

 

 

Exchange rate insurance could be a good way to neutralize potential risks resulting from adverse foreign currency fluctuations. Indeed, specialised insurance companies provide this kind of service to companies involved in International trade transactions.

This type of insurance could take the following forms:

 

Import-Export Exchange rate insurance.

When an Importer or an Exporter must receive or honour a payment in a foreign currency, they can benefit from Import-Export Exchange rate insurance. In this case the policyholder will secure a fixed exchange rate. A premium will be charged based on the currency covered and the length of the period considered.

Tender Exchange rate Insurance

During a Tendering process, an Exporter needs to have a fixed exchange rate in order to bid in the best conditions. Indeed, adverse currency fluctuations are likely to occur between the time when the bidding is assessed and the tender is awarded. This is where the tender Exchange rate insurance comes in as good way to cover this kind of risks. Indeed in this case the exchange rate is guaranteed during the whole period and as a result the Bidder can avoid uncertainties that might compromise the profitability of the project.

 

Fixed rate:

In this case, the insurance will charge a premium to the Importer or the Exporter, who in turn will benefit from a fixed exchange rate. As result, the policyholder prevent any currency risk which might impact his profit margin / procurement costs. However in this case it will not be possible to take advantage of favourable exchange rate evolution.

Fixed rate with shared profits.

Here the exchange rate is still guaranteed, but the potential gains resulting from favourable currency fluctuations are shared between the underwriter and the policyholder. The proportion in which profits are shared could vary from 70%/20% to 50%/ 50%.

However in both cases the risk is 100% covered

 

Please click on the links below for more hedging techniques