IDENTIFICATION AND MEASUREMENT OF EXCHANGE RISKS : In foreign trade, you may be either an exporter or an importer. Let us now examine what is the exchange risk to which an exporter or an importer is exposed.
The exchange risk arises because there is a time gap between the shipment of goods and the receipt and payment of the price thereof. And the exchange rate of the currency involved may undergo a change in the time period invoked if you are an exporter, you receive less rupees than you expected. If you are an importer, you might have to pay more than what you bargained for. Let us first see the position as an exporter.