Foreign economic activity. Positions of currency terms of the contract (most important)

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Foreign economic activity. Positions of currency terms of the contract (most important)

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69. Positions of the currency terms of the contract

Monetary and financial conditions of the contract include the principles and forms of settlements between the exporter and importer, the choice of the currency of price and payment, the system of insurance against the risk of currency losses and various kinds of guarantees against non-payment or its unreasonable delay.

The currency terms of the contract are inextricably linked with its main content (quantity, quality, range of products supplied, delivery period) and imply, first of all, a reasonable choice of the currency in which the price will be determined and payment will be made.

To fix the price in the contract, any of the FCC of the importer or a third country, which is used in international settlements, is used. The price currency is set on the basis of interstate and trade agreements between countries, and depending on the methods of selling specific goods on the world market (through international exchanges and auctions).

When choosing the expected price currency, it is necessary to strive to reduce the possible currency conversion when making a payment, which is achieved by fixing the price and payment in the same currency. International practice provides for an option that involves the use of the wire transfer rate (or the seller's rate) in the country in whose currency the payment is made, as more favorable for the exporter, and the average rate of the seller and buyer (arithmetic mean) when converting currencies.

Currency risk - possible losses caused by a change in the real value of a payment denominated in a foreign currency due to fluctuations in its exchange rate. Distinguish exchange rate currency risks (losses due to fluctuations in exchange rates) and inflationary (depreciation of currencies as a result of inflation).

One of the ways to neutralize currency risks is to reduce the time between the conclusion of a transaction and the payment.

Special measures - protective currency clauses.

Protective clauses - ways to insure currency risks. They are based on the principles of linking the amount of payments with changes in the foreign exchange and commodity markets and are aimed at maintaining the content of the settlement obligation expressed in a specific currency.

Currency reservations - a condition included in the text of the contract, according to which the amount of the payment changes in proportion to the change in the exchange rate of the payment currency in relation to the exchange rate of the reservation currency. They can be:

1. Unilateral - protect the interests of only one of the parties, provide for the recalculation of the payment amount only in the event of an increase (or decrease) in the exchange rate;

2. Bilateral - provide for the recalculation of the amount of payment in the event of a change in the exchange rate and apply to both partners of a foreign trade transaction;

3. Direct (based on the current exchange rate) - are used when the currency of the price and payment coincide, making the price of the goods and the amount of payment dependent on the change in the exchange rate of another, more stable currency (reservation currency);

4. Indirect (based on the current exchange rate) - are used when the export price is fixed in a more stable currency, and the subsequent payment is in a weaker currency;

5. Index - focused on changing the amount of payment depending on the movement of the general (or individual) price index.

6. Revision clauses of the contract price - provide for the revision of the contract price in the event of a change in the exchange rate, prices that go beyond the limits of its fluctuation established by the counterparties.

Protective forms against depreciation of currencies are some types of foreign trade and foreign exchange transactions - compensation, barter, as well as futures, forward transactions and currency options.

Author: Bobkova O.V.

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