In international trade, transactions are happening with unknown parties in different countries. In general companies are exposed to default risk of the counter party, country risk and currency exchange risks.
Recently few cases are reported wherein Indian exporters were not able to recover their payments from the overseas buyers even though they received letter of credit as security. Few cases are shared below:
Last year it was reported in the market that more than 80,000 exporters were put under caution list for non-compliance of FEMA (Foreign Exchange Management Act) 1999. When some of the cases were reviewed it was found that the exporter could realize more than 95% of the export proceeds but a small portion remained outstanding. Though exporting company had written off financially it was not properly reported to Reserve Bank. Reserve Bank through a system called EDPMS was able to capture the data of exporters who had not brought full payment to India within the prescribed IDPMS. Though lot of powers are delegated to Authorised Dealers (AD) still there is a gap in implementing the delegated authority by AD.
Recently in 2018 USD moved from 63 to 75 levels. Some of the exporters were waiting the USD to cross 75 levels to cover their exposures and some of the importers rushed to the market and covered their exposure at 74 levels. But USD/INR came down to 67 levels. Exporters missed the opportunity of capitalizing the up movements and importers rushed to the market at an inappropriate time. When the currency market is moving on either side, companies should have a basic idea of understanding the currency market and should have currency risk management strategy.
This work shop is designed to provide an update to the participants to manage:
Mr. K. Parameshwaran is a Post graduate in Foreign Trade and a Certified Associate of Indian Institute of Bankers (CAIIB). He has more than 30 years of work experience with various National and Multinational Banks at senior managerial positions. Currently he is an Associate Professor with S P Jain Institute of Management and Research Mumbai handling International Finance. He is also associated with the BAFT (Washington), Confederation of Indian Industries, Federation of Indian Exporters Organisation, International Chamber of Commerce (ICC Paris) India. He is an advisor and trainer for corporate. Conducts regular training programs on foreign trade and finance for MNCs and Banks.
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