- Describe a typical foreign trade transaction.
- How can forfeiting be used for trade finance?
- What is Eximbank and how can it help with trade transactions?
? Describe a typical foreign trade transaction.
I am giving an example of typical foreign exports of Automobiles from US to India. Suppose the GM is exporting 100 automobiles to Indian buyer. The sales price per automobile is $20000, hence in Indian Rs it will be $20000*43 =Rs 860,000. Here the foreign exchange rate of IUS$ =INR 43. (x-rates, 2007)
Thus the total value of transaction in US Dollar is $20000*100= $20, 00,000 and in INR it will be 2000000*43= INR 8, 60, 00,000. Hence it's a transaction of US exports to India.
? How can forfaiting be used for trade finance?
Forfaiting is a mechanism of financing exports by discounting export receivables evidenced by bills of exchange/ promissory notes without recourse to the exporter. Under this scheme the exporter after finalization of the sale with a prospective buyer furnishes all necessary details regarding the contract to the Bank through which the ...
The solution provides a description of foreign trade transaction. How forfeiting be used for trade finance is discussed.