USD or EUR? Handling currency swings in cross-border strapping component orders

August 2018 was a difficult month for anyone holding a price in one currency and a cost in another. The Turkish lira fell to what was then a record low of 5.4250 per US dollar late on 6 August, and AP reported on 7 August that it had lost more than 27% of its value against the dollar since the start of 2018. It fell further in the days that followed: Argaam reported a fresh all-time low of 7.24 per dollar in early Asian trading on 13 August. In the same week, Proclamation 9772 of 10 August 2018 raised the US Section 232 duty on steel articles from Turkey to 50%, effective from 13 August.

For anyone buying from or selling into Turkey, those weeks showed how quickly a quoted price can drift away from its cost. The underlying lesson applies to any cross-border order, whatever the currencies involved. A quotation is a promise made at one exchange rate and paid at another. The contract terms decide who absorbs the difference. This article is about those terms, not about forecasting rates or financial products.

Who carries the movement

Choosing the quotation currency for component orders allocates exchange-rate risk, whether or not anyone says so.

Quotation currency	Who carries a movement before payment	When it tends to suit
The seller’s home currency	The buyer	The buyer has income in that currency or a treasury function that manages it
The buyer’s home currency	The seller	The seller can match the currency with its own costs or manage it at scale
A third currency such as USD or EUR	Both, in different ways, depending on their own costs	Both parties already price and pay in that currency for other trade

Quoting in US dollars or euros can make sense when both parties already price other costs, such as freight, in that currency. It does not remove risk. It moves it to whichever party’s own costs and income are in a different currency.

Validity periods and the price basis

In volatile months, the single most useful change is a short, dated validity period. “Valid for a stated number of days from the quotation date” is clear. “Subject to change” is not, because it gives the buyer nothing to plan against and the seller nothing to enforce.

Make the price basis explicit at the same time:

• the currency, written out, not only a symbol
• the Incoterms 2010 rule and the named place
• what is included: packing, pallets, documents
• the quantity the price relies on, and the unit
• the quotation date and its expiry

A buyer comparing two offers in different currencies should convert both at the same reference rate on the same day. Otherwise, the comparison measures the timing of the quotes as much as the prices.

Adjustment clauses both sides can audit

For longer agreements or scheduled deliveries, a currency adjustment clause can be fairer than repeatedly reissuing quotations. It works only if both parties can check it:

1. A published reference rate. Name the source, for example a central bank’s published reference rate, and the time of day it is taken.
2. A defined date. State whether the rate is taken on the order date, the dispatch date or the invoice date.
3. A threshold. Small movements are absorbed; beyond an agreed band the price moves.
4. Symmetry. The clause works in both directions, not only when the rate moves against the seller.
5. Scope. It applies to unshipped quantities, not to goods already invoiced.

Write the clause into the order confirmation, and keep the rate evidence with the invoice when it is used.

Currency is not the only moving cost

August 2018 also showed that a non-currency change can arrive in the middle of a currency swing. The higher US duty on Turkish steel articles applied to goods entered from 13 August, whatever the quotation said. Whether a particular strapping product was affected depended on its classification, but the general point stands: landed cost includes duties, freight and surcharges, and each can move independently. Track them as separate lines, so that a change in one is not hidden inside the price of another.

Payment timing and documents

• Match the invoice currency to the agreed quotation currency.
• Agree who pays bank charges on each side of an international transfer.
• If a deposit and balance are used, state whether both are fixed in the quotation currency.
• Where an invoice must also show a local-currency amount, as UAE tax invoices do for VAT, keep the exchange rate used with the invoice.

A checklist for the next quotation

• Currency named in full on the quotation and the order
• Quotation date, validity period and expiry date
• Delivery rule and named place
• Unit, quantity and packing included in the price
• Adjustment clause, if any, with reference rate, date, threshold and scope
• Duties and surcharges shown separately

Asking for a comparable offer

When requesting a quotation for galvanized wire buckles, phosphated wire buckles, sheet metal clips or steel strapping seals, state your preferred currency, delivery point and quantity basis through the enquiry page. The RFQ checklist covers the technical fields to send alongside.