Rate of Exchange Explained For Import and Export Business

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Exchange rate done right could be your friend or foe and could mean life and death for your international trading business. Different country currencies plays vital role and usually are being used to pay for your products instead of your currency that adds more convenience to it, either price your products aggressively in multi-currencies or put extra burden to your client by letting him/her go to a bank and get currency converted to your desired currency, such as dollar, pounds or euro.

Two methods to determine foreign exchange rate are floating exchange rate and fixed exchange rate. Floating exchange rate or commonly known as flexible exchange rate are widely used between trading countries, meaning let alone the markets decide by means of demand and supply. This exchange rate is often fluctuating, and during the downsizing of the economy, this is the smartest choice for your import export business. You turn to fixed exchange rates allowing you to price aggresively giving some allowances and determining the rate of exchanges in between countries.

Providing still the lowest cost as cheap as possible is vital and the ideal when doing international trade, so you ease out the burden for buyers. Study and observe target market carefully, past fluctuations in exchange rates and economic stability before you come up with your international prices for your products.

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