When a negotiator embark on an international agreement with a foreign partner, they have to
give serious consideration to which currency is going to be used in their financial
transactions. There is a certain amount of risk that a company might have to assume as the
negotiators consider whether they are going to issue or receive payments in a foreign
denomination. It occasionally happens that between the time when a contract is signed, and
when payment begins to flow, the currency of the foreign partner’s company could either
increase or decrease dramatically. Any company that handles foreign currency faces the
hazard of paying more or receiving less than it projected. The risk increases proportionately
in relation to the duration or longevity of the contract agreement.