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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”.
  • 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.
  • 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.
  • 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.

Leads and Lags

leads and lags


The Leads and Lags method consists in advancing or postponing the payment date in order to benefit from foreign currency fluctuations. This method is used when foreign exchange exposure has not been covered.


This could take the form of 4 scenarios:


Exporter’s perspective


Scenario 1: Let’s consider the case of an Exporter who will receive a payment in a foreign currency at a given date. If he forecasts that this foreign currency is likely to appreciate in the future, he might ask the payment to be postponed. By doing so, he expects to increase the amount translated in his domestic currency and ultimately his profit margin.


Scenario 2: Conversely, if the Exporter expects a depreciation of the foreign currency in which the payment is denominated, it is in his best interest to speed up the process by asking a payment by anticipation.


Importer’s perspective


Scenario 3: An Importer who must honour a payment in a foreign currency, is exposed to the risks resulting from its appreciation. This is why if he forecasts an upward trend, it is in his best interest to process the payment in advance in order to limit potential losses.


Scenario 4: On the other hand, if the foreign currency is expected to depreciate, the Importer might want to postpone the payment. By doing so, he will be better off, since the payment denominated in his domestic currency will be lower.




It must be pointed out that the leads and lags method is particularly speculative as it is based on predicting exchange rates evolutions. In addition, postponing a payment generally imply an increase of financial cost (cash flow financing) that must be subtracted from potential gains in order to determine whether or not the whole operation is worthwhile conducting.


Furthermore, it must be stressed that asking for a payment in advance might not be possible as this might put pressure on buyer’s financial situation. Eventually, this method is hardly compatible with usual payment methods in International trade, which requires a strict compliance with payment terms (letter of credit, documentary collection, etc.…).

Please click on the links below for more hedging techniques


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