A UK company has just despatched a shipment of goods to sweden. The sale will be invoiced in swedish korner and payment is to be made in 3 months time. Neither the UK exporter nor the swedish importer uses the forward foreign exchange market to cover exchange risk
If the pound sterling were to weaken against swedish korner what would be the foreign exchange gain or loss effects upon the Uk exporter and the Swedish importer
Sir answer is that Uk exporter will face gain and Swedish importer will have no effect
Sir I don't understand that how Uk exporter will face gain , won't it suffer loss?
Ask the Tutor ACCA FM
MCQ
8y ago#1No - it will be a gain.
If the pound is weaker, then the Swedish kroner will buy more pounds.
The same was invoiced in kroner, so they will receive the same amount of kroner and this will convert to more pounds.
This topic is locked — no new replies.