Managed FX Risk

Identifying the Risk Businesses that trade internationally or have operations overseas are likely to be exposed to foreign exchange risk arising from volatility in the currency markets. The most common cause of foreign exchange exposure arises from having to make overseas payments for your imports priced in a foreign currency or receiving foreign currency receipts for your exports. However, exposure can also arise from:
• Foreign currency borrowing/deposits
• Overseas subsidiaries
• Assets located overseas
The impact that exchange rate fluctuations have on profitability will vary but in many cases it can be significant.

For example, an American liquor company signs a contract to sell a French retailer 100 cases of whiskey for a 50 euros per case, or 5,000 euros total. The American company agrees to this contract at a time when the euro and the dollar are of equal value. Thus, the American company expects that when they deliver the whiskey, the agreed upon payment of 5,000 euros will equal roughly $5,000.
However, it may take a few months for the whiskey company to deliver the goods. In the meantime, Europe undergoes an economic crisis and the value of the euro goes down sharply. By the time the whiskey is delivered, one euro is worth only $.75. Thus, though the French company still pays the agreed upon 5,000 euros, that amount is now equal to only $3,750.
YuanPay offers a comparison FX rate, our customers can act on the day you want to buy or sell your foreign currency, we will lock-in the quote for the transaction. Our customer will no longer need to suffer from the Exchange rate fluctuations.

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