When exporting to a soft currency country that is experiencing a weakening exchange rate, which of the following may be used to counter the transaction risk:
A) Exporters can insist on immediate and full payment
B) Exporters ensure that the importer pays the full hard currency amount over a reasonable time period
C) Exporters can build in an export price premium to compensate for any currency depreciation
D) Any of the above

Question

Quizplus · Accepted Answer

Each of the options provided offers a strategy to mitigate the risk associated with currency depreciation in a soft currency country. Immediate and full payment (A) avoids the risk of further depreciation, ensuring payment in hard currency over time (B) provides stability, and adding a price premium (C) compensates for potential currency value loss.

When Exporting to a Soft Currency Country That Is Experiencing