Letter Of Credit : International Trade

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International trade
Letter of Credit (L/C) and a draft
A letter of credit is a written pledge by a buyer’s or importer’s bank to the exporter or seller’s bank. The letter of credit guarantees payment of a particular sum of money in a specified currency, as long as the seller meets the specified conditions and presents the set documents within the agreed timeframe. The prescribed documents include commercial invoice, airway bill and certificate of origin. To institute a letter of credit favoring the seller, the buyer either makes an upfront payment of the specified sum or negotiates with the issuing bank.
When the seller or agrees to use the letter of credit, the documents presented (airway bill, invoice and the certificate of origin) ought to be accompanied by a draft. A draft is an instrument used to demand payment. The draft is mainly a check representing the claim for payment, also known as the bill of exchange; it is drawn and signed by the seller (exporter).

What is the major difference between “currency risk” and “risk of non-completion?” How are these risks handled in a typical international trade transaction?"
Currency risk is the possibility that the currency chosen for payment of the import fluctuates in value relative to the exchange currency. Take a case where a British firm exporting to France wants payment in pounds while the Importer (French) wants to make the payment in Euros. If the export contract

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