Offsetting Imports with Exports

A. D. P. Edwards

Chapter 14 in The Exporter’s & Importer’s Handbook on Foreign Currencies, 1990, pp 69-70 from Palgrave Macmillan

Abstract: Abstract Where a company or group has transactions of exports say in guilders and imports payable also in guilders, it is quite often tempting to try and balance receivables with payables, thus assuming there is no exchange risk. This practice can be very dangerous. It is not so much a question of balancing the imports with the exports but the cash flow that matters. If a company has got to pay guilders today or within the next few days but is not expecting to receive guilders for another three months, then it will merely have to buy the guilders at the spot rate of exchange and of course it has thus incurred the whole of the exchange risk. So, any function which tries to balance exports with imports in the same currency should primarily look at the cash flow position. Nevertheless, having said this, such a company is not getting the best possible result from its transactions.

Keywords: Interest Rate; Cash Flow; International Economic; Exchange Risk; Foreign Currency (search for similar items in EconPapers)
Date: 1990
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-11852-6_15

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349118526

DOI: 10.1007/978-1-349-11852-6_15

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().