Foreign Currency Hedging
Tuesday, March 24, 2009
Query from abid younas:
"If a company imports products through open account method (without having a letter of credit) or through contructual imports. What are the hedging instruments available to the company for foreign currency transactions since all of you are aware about exchange rate fluctuations in our country."
Comment:
Since SBP has temporarily restricted the farward booking of imports so that company has to pay at the spot rate prevailing at the time of getting documents and has to carry the risk of exchange rate fluctuation.
However, in normal circumstances Forward Rate Booking and Currency Swap Transaction would be avaialbe to hedge the imports without carrying the risk of exchange rate fluctuation.
Labels: accounting, Treasury
posted @ 1:46 PM,
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