Case study: International trade relationships
Hedging forex volatility and providing payment guarantees for our client’s Brazilian supplier.
Challenges
- Our manufacturing FMCG client did not have previous experience with importing from Brazil and needed the right expertise to navigate complex Exchange Control regulations
- Advance payment was required in a foreign currency, but our client was concerned about the forex movements prior to making payment, which would impact on price and profit margins
- As the business relationship with the supplier in Brazil was still new, this client needed to furnish the supplier with payment guarantees
- Our client was concerned about the possibility of non-delivery of the goods and required the right solutions in place to mitigate those risks
Solutions
- Issuing of a Documentary Credit, a secure payment method for international trade, which provided both our client and the exporter with a secure means of protecting their interests
- We advised which banks had existing banking relationships with Standard Bank, ensuring that the client could safely send payments
- Funds were remitted via Standard Bank’s Outward Telegraphic Transfer services, providing a safe and reliable method of transferring funds electronically
- Foreign exchange volatility was hedged through securing a competitive forward foreign exchange rate to convert the rand to foreign currency