If you are an importer of goods and you will make payment for the purchase of inventory on 90-day terms,which of the below is the correct term for the exchange rate that you will use?

Question

Quizplus · Accepted Answer

The importer will need to use a forward rate for the exchange rate as they will be making payment in the future. The forward rate allows the importer to lock in a specific exchange rate for a future date. The other options (indirect rate, spot rate, direct rate) are not specific to the timing of the payment that the importer will need to make.

If You Are an Importer of Goods and You Will