In import trade, it is often necessary to pay foreign exchange, which involves the exchange of various currencies. In order to avoid the risk of loss caused by exchange rate fluctuations, importers should carefully choose the currency of valuation and consider the factors of exchange rate changes when determining the price terms of imported goods. You can choose to use a series of foreign exchange hedging transactions in the international financial market to fix your own costs.
For example, to avoid exchange rate increases, importers can purchase foreign exchange in advance and deposit it into the company’s foreign exchange account. When payment is required, it can be directly remitted from the foreign exchange account according to the actual amount, so that the exchange rate can be locked in advance. In addition, for importers, theoretically speaking, it is more cost-effective to use “soft currency” for import contracts, because the exchange rate of “soft currency” will fall within a certain period of time, and the amount of RMB to be paid can be reduced when making forward payments.
However, in actual business, the currency used for valuation should also consider various factors such as the trade habits of both parties. Importers can also directly choose RMB settlement for cross-border trade, so there is no exchange rate risk.