Must the currencies be consistent in entrepot trade? Find out now!
Solved#Entrepot trade#
I’ve been researching entrepot trade recently and have some doubts about the currency issues involved. I’d like to ask everyone, in entrepot trade, must the currencies used in different stages be consistent? For example, if I purchase goods from Country A and resell them to Country B, do the settlement currencies for procurement payments, resale payments, and transportation costs have to be the same? I’d appreciate it if experienced friends could explain this to me. Thank you!
Professional consultant answers
James LiuYears of service：10Customer Rating：5.0
Foreign trade tax refund consultantConsult
In entrepot trade, currencies do not have to be consistent. Entrepot trade involves multiple parties, and different stages may have different trading partners and market conditions, so settlement currencies can be flexibly chosen.
For example, when purchasing goods from Country A, which typically uses USD for settlement, and reselling to Country B, which may prefer EUR, this results in two different settlement currencies. As long as all parties agree, this is entirely feasible.
The same applies to transportation costs. Shipping companies may accept multiple currencies, and the final choice should prioritize convenience and market practices. However, currency inconsistency may introduce exchange rate risks. Before trading, it’s important to assess the impact of exchange rate fluctuations on costs and profits. Tools like forward exchange contracts can be used to lock in exchange rates and reduce risks.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
Not necessarily. For example, in some international bulk commodity entrepot trades, procurement might use USD, while resale could use the local currency of the destination country, as long as both parties agree.
Sarah ZhangYears of service：8Customer Rating：5.0
Document expertConsult
Consistency is not required. Entrepot trade is flexible, and different currencies can be chosen based on the needs of trading parties and market conditions. However, exchange rate fluctuations should be monitored to avoid impacting profits.
William YangYears of service：5Customer Rating：5.0
International logistics consultantConsult
Currencies don’t have to be the same. Often, trading parties will select currencies based on their own circumstances and market conventions, but currency conversion costs and fees should be considered.
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
Of course not. Different countries and regions have varying currency preferences. In entrepot trade involving multiple parties, choosing currencies for convenience is common—just be mindful of exchange rate risks.
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
Currencies can differ in entrepot trade, depending on negotiations between parties. Factors like costs and market conditions should be considered, and the impact of exchange rate changes should not be overlooked.
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
They don’t have to match. For example, procurement from Southeast Asia might use local currency, while resale to Europe uses EUR, as long as the transaction proceeds smoothly and both parties agree.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
There’s no mandatory currency consistency in entrepot trade, but mismatched currencies require proper exchange rate risk management to avoid profit fluctuations.
Robert ChenYears of service：6Customer Rating：5.0
Customer service consultantConsult
Not necessarily. Entrepot trade involves multiple entities with different needs, so currencies may vary. Pay attention to exchange rates and conversion costs during operations.
Emily LiuYears of service：10Customer Rating：5.0
Settlement and payment expertConsult
Currencies can be inconsistent, decided based on the transaction context and mutual agreement. However, inconsistency increases financial management complexity, so plan ahead.