July 14, 2020
Min read

Trade Tip: Foreign Currency Exchange


Foreign currency exchange (referred to as forex) poses a challenge to many entrepreneurs conducting international trade. Currency exchange rates can be volatile, resulting in real losses when nominal exchange rates change between payments. Further, it can be challenging to exchange currencies such as Rwandan Francs and Kenyan Shillings for US Dollars and Euros, the typical currencies of international trade. Even if an entrepreneur is able to find a source of the preferred currency with a favorable exchange rate, exchange fees, typically between 1% and 3%, substantially cut profits. 

Between the scarcity of hard currency, the volatility of exchange rates, and exorbitant fees, it should be clear why entrepreneurs must minimize the number of times currencies change in each trade. In order to do so, the currency of payment specified in contracts with suppliers should ideally match the currency that the end customer will pay. Unfortunately, this is not always possible, and so it is necessary to be deliberate and forward-thinking when changing currencies so as to limit the effect of currency exchange on profit margins.

Kountable takes care of currency and foreign exchange issues for our Pro and Premium members when we package trades for funding by our capital partners. We work with our members to structure contracts to receive payment in favorable currencies. Additionally, trades submitted on the Kountable platform can easily receive funding in USD or Euros from our capital partners, so as to pay suppliers in their preferred currencies. These are huge advantages for our members. Not only does it contribute to maximizing the profit margins of each trade, but it enables them to source goods from high-quality global suppliers that they may not otherwise have access to.

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