When you are dealing with Foreign Exchange Rate risk when being a corporation without even doing research on the topic I would think that the issue may rely on the exchange rate dollar difference. America has one of the highest dollar rates. In Mexico to transfer your dollars to Peso you will get more money in Mexico then in the United States. Peso’s are 20.60 MXN for every American Dollar. It is important to try to calculate how this could be profitable for both sides.Â
One aspect would be to open a line of credit through both sides or give the company the choices of payments through stocks. Each side doesn’t want to see a profit loss and that occurs more than often because of the fluctuations of each currencies monetary value. Another way to offset this and build relationships with other foreign companies is to give them the option or a forward contract. This will give them the opportunity to buy what is needed now and sell it at a later date when currency profit is at its optimal price amount.
