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currency options as you have learnt the forward contract protects the interest of the holder against the risk of adverse movements in exchange rates
forward contracts as you have learnt that entering into forward contract is one of the important method of dealing with the foreign exchange risk
methods of dealing with foreign exchange risksa firm can deal with foreign exchange risks in the following ways1 taking risk the firm may decide to
risk as an importer the position is entirely opposite of what it is for the exporter if the importer is billed in rupees he does not stand to loss
risk as an exporter you may draw your export bills either in rupees or in foreign currencies if you have drawn your export bills in indian currency
identification and measurement of exchange risks in foreign trade you may be either an exporter or an importer let us now examine what is the
bill rate bill rate may also be either bill buying rate or bill selling rate let us discuss them in detail i bill buying rate this rate is applied
tt telegraphic transfer rate telegraphic transfer rate may be either tt in detail tt buying rate this rate is applied for purchase of foreign
distinction between spot and forward rates you have learnt what spot and forward rates are let us now explain the distinction between both rates
forward quotations forward rates can be expressed in two ways commercial customers are usually quoted the actual price which is referred to the
forward rate the rate quoted for delivery of foreign exchange in future at some agreed date ie when the value date is more than two business days in
spot rate the current exchange rate is usually the spot rate it is the rate at which most foreign exchange transactions are carried out if the
definition of exchange rate a foreign exchange rate is simply the price of one countrys money in terms of another countrys money in other words the
meaning and nature of exchange rates during the great depression of the 1930s almost all countries found it difficult to increase their exports many
introduction you have learnt about export credit insurance in unit 9 as you know export business involves exchange of currency of one country for
objectivesafter studying this unit you should be able to1 explain the meaning of exchange rate2 describe various types of exchange risk3
financial guarantees exporters require adequate financial support from banks to carry out their export contracts ecgcs guarantees protect the banks
small exporters policy the small exporters policy is basically the standard policy it incorporates certain improvement in terms of cover in order to
documents in support of claims every claim has to be supported by documentary evidence important documents that should accompany the claim
procedural formalities the ecgc has three types of claim forms i form no501 for claims rising due to non payment for goods accepted by the buyer
procedure for making a claim a claim will arise when any of the risks insured under the policy materialises if an overseas buyer goes insolvent the
procedure for taming a policy an intending exporter should fill in a proposal form no 12 1 available with all ecgc offices and submit it to the
basic principles of ecgc operation there are two basic principles on which ecgc worksi spread of risks an exporter is required to insure all the
construction works policy construction works policy has been designed to indian contractor who executes a civil construction job abroad this policy
services policy when indian firms render services to foreign parties they would be exposed to payment risks similar to those involved in export of