During
that period of volatility, depending on the stage of your transaction- exchange
gains and losses were recorded and they were massive! One of the complexities
of international trade is currency fluctuation because trade is usually
conducted between different countries that use different currencies.
This
poses a need for conversion from the local currency to the currency in which
the transaction is quoted which is most times the Pounds Sterling,(GBP),the US
Dollar (USD) and the Euro (EUR).
It is
therefore necessary as an exporter to understand currency fluctuations and the
risks it poses for your transactions. In seasons of currency fluctuations,
currency hedging allows the exporter to mitigate his risk by hedging the
currency position on his transactions to minimize losses that can arise from
currency fluctuations.
As an
exporter, you can reduce the negative effects of currency instability by
keeping the lines of communication with suppliers open, monitoring currency
changes regularly and drawing up plans to cope with financial instability.
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