There are some concepts needed to be clear such as:
+Conversion of currency: In some situations, the normal value and the export price are fixed by different currencies. So as to compare, we have to convert these two currencies to the same currency.
+Rate of exchange is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency.
For example, an interbank exchange rate of 20 000 Vietnam dong (VND) to the United States dollar (US$) means that 20000 VND will be exchanged for each US$1.
+Forward market: in a simple way, forward market is an over-the-counter marketplace that sets the price of a financial instrument or asset for future delivery.
Contracts entered into in the forward market includes the payment at a specified future time at a price agreed upon today. The fixed price includes the rate of exchange.
So we can understand the Article 2.4.1 of Anti dumping Agreement:
1) “When the comparison under paragraph 4 requires a conversion of currencies, such conversion should be made using the rate of exchange on the date of sale”: In case there are 2 different kinds of currency used for payment in the contract between the exporter and the importer, a conversion of currencies will be requested to calculate the margin of dumping. The exchange rate used in conversion is the exchange on the date of sale.
2) “…, provide that when a sale of foreign currency on forward markets is directly linked to the export sale involved, the rate of exchange in the forward sale shall be used”: in a forward market, the rate of exchange is already agreed upon the day contract was set. Therefore when there is a presence of foreign currency involved in forward contract, the margin of dumping will be relied on the rate of exchange which was fixed in the contract before.
3) Because the exchange rates is not stable so it shall be ignored and in investigation the authorities shall allow exporters at least 60 days to have adjusted their export prices.