7.1 Importance of Foreign Exchange in International Trade

Foreign exchange — the currency of another country (and the claims payable in it): the trade's blood. Every import is a foreign-currency payment; every export a foreign-currency receipt; the exchange RATE converts the trader's prices (the competitiveness of the Nepali exporter set partly by the rupee's external value). The importance (five heads — the marking skeleton): The payments' bridge: no cross-border trade without the cross-border settlement (the wire, the bill, the credit of Unit 6 — all riding the exchange rails); The price's factor: the exchange rate enters every trade contract's economics (the Incoterms' price, the quotation's currency — the trader's exchange-RISK exposure); The nation's capacity: the reserves' level bounds the import capacity (the L/C's opening, the import licensing — the exchange control's gate); the remittance economy's Nepal reality — the reserves substantially built on the workers' remittances; The macro-stability: the exchange management (the Nepal Rastra Bank's daily reference rate's regime) as the monetary policy's arm — stability as the trade's environment; The law's presence: the foreign exchange is among the most regulated objects in the economy — the convertibility's rules decide what the trader may do.