To: You
From: Your Manager
Date: Sept 26, 2021
Subject: Trade Finance
Below are some questions that clients have posed recently. Janet had to travel abroad again so these questions are now yours. As before, she did leave some of her initial sources.
1. A company in YOUR STATE gave a customer in YOUR COUNTRY a price quote US$ 25,000 (CIF) on July 1, 2021. They expect to be paid in US$ on Sept 28, 2021. The foreign exchange rate between these two currencies has changed over this time. How much more/less of their currency is our customer going to have to convert on Sept 28 than if they had converted it on July 1?
Indicate the exchange rate between the US$ and YOUR COUNTRY’s currency on July 1, 2021.
US$__1_____ = __________ US$_25,000_ = __________
Indicate the exchange rate between the US$ and YOUR COUNTRY’s currency on Sept 28, 2021.
US$__1_____ = __________ US$_25,000_ = __________
This website will give you current exchange rates as well as historical exchange rates for over 100 currencies. https://www.x-rates.com/historical/ (Links to an external site.)
2. The Export-Import (Ex-Im) Bank of the United States has Bank Loan & Guarantee Programs, Export Credit Insurance, and a Working Capital Guarantee Program available for US exporters. Verify the programs available for US companies exporting to YOUR COUNTRY?
Check the Ex-Im Bank’s Country Limitation Schedule to see if these programs are available for YOUR COUNTRY at https://www.exim.gov/tools-for-exporters/country-limitation-schedule (Links to an external site.)
3. If the dried meal worm powder company is eligible for a Small Business Association (SBA) export loan program, identify an SBA approved lender in YOUR STATE (or a nearby state) that participates in the SBA’s export loan programs.
https://www.sba.gov/document/report–participating-export-lenders (Links to an external site.)
4. Identify one financial institution in YOUR STATE (or a nearby state) and one in YOUR COUNTRY that handle global trade finance. Export letters of credit are the payment method of specific interest. A client is considering this option and would like to know what institution(s) to consider. Please include contact information for the appropriate department in that institution.
A useful resource may be trade finance award winners – https://www.gfmag.com/magazine/february-2020/2020-worlds-best-trade-finance-providers (Links to an external site.)
5. A client is considering the use of a Free Trade Zone (FTZ) or Special Economic Zone (SEZ) in YOUR COUNTRY. Identify the names of the options available. If there are multiple options, the one closest to the capital would be preferred. Discuss the benefits this specific zone offers. Include the contact information.
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