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Effects foreign exchange fluctuations and its Impact on the business

The organisation is put to exchange risk. This means that for the same product, if a business contracts with seller for a specific amount due to rate fluctuations, that will be paying more. The customs duty structure, VAT etc are directly linked to such rates which will have further impact. Cash outflow also increases thereby straining teh working capital requirements. In short, this directly affects the profitability of a project/business.

Tags:  fluctuations outflow profitability