Europeans to use EU flag as a flag icon...

[moomin]

Originally posted by Sagacious Dolphin

Well... duh. They do, you know

Give an example then.

Well, if you insist. When the Swedish state handed out licences to mobile operators for 3G-networks, they all had to commit to elaborate plans detailing how, where and when they were going to build what. All these plans have now been contacted network equipment operators such as Ericsson, Nokia and Alcatel. The prices may be in local currency, but rest assured that actual figures are due to be adjusted for any number of factors including currency fluctuations.

In certain indistries. In others, long-term contracts that don't hold all kinds of adjustment clauses - including, of course, currency clauses - are almost unheard-of

If you agree a contract at a given price in a given currency you will not change that price due to currency fluctuation. If you are the person gaining why would you agree to change the contract price?

Because you're not selling otherwise. Look, contactual risk management is nothing new - if a client absolutely wants a fixed price of future delivery, he has to pony up with a risk bonus - the manufacturer will try to do reasonably close worst-case estimate of future costs - including exchange costs - and hand over the bill. The reason people accept contacts with adjustment price clauses is that they are cheaper and therefor more effective most of the time.

I really don't think so. I'd be interested to tell us why you believe that. I'm referring to quite ordinary business practices

Not ordinary.

Then we can only conclude you conduct business in your own way in Britain. Not that it would be the only thing you do differently

It means nobody sells teleco systems due for delivery 2005 for a fixed price. The reason you never hear the exact amount given as deals are presented isn't that they don't want to brag - beacuse they do! - but that any number presented at this point is a ballpark figure anyway, due to be adjusted by any of a huge number of circumstances that are all regulated in the deal. There's nothing mysterious or fishy about all this, and it's normal business practice even with certain long-term service contracts these days

The relevance of contract pricing to FX exposure is?

That contact princing allows for FX exposure, among other risks.

[Dauphin]

When the Swedish state handed out licences to mobile operators for 3G-networks, they all had to commit to elaborate plans detailing how, where and when they were going to build what. All these plans have now been contacted network equipment operators such as Ericsson, Nokia and Alcatel. The prices may be in local currency, but rest assured that actual figures are due to be adjusted for any number of factors including currency fluctuations.

If tender prices are in Krona, and changes are due to currency fluctuations between the Krona and currency X, Y and Z that is effectively stating that the contract is not being agreed in Krona, but in currency X, Y and Z.

All you are doing is stating the contract in a convoluted way. Far simpler to just state the contract in the currency for which adjustments would have to be made. However the chance of a government stating that they will agree a contract price in a foreign currency is unlikely. But that is what they are doing.

[Dauphin]

Then it's fortunate I'm not saying that, isn't it? What I'm saying is that the often-toted line that the Euro eliminates currency risk isn't true ieven n Euroland.

If all European countries used the Euro, then no new FX risks would be introduced by intra-Europe trading.

If you have 15 countries trading in 15 currencies you have risk introduced with every transaction. Over half of all transaction would have risk due to intra Europe trading, and under half due to extra-Europe trading. Using a single currency removes over half the risk generated in the EU.

Sure there can be FX risks passed on as costs within Europe, but they will not be compounded risks, as I said before, they are sunk costs/risk.

[Gangerolf]

Europeans to use EU flag as a flag icon...

Not all europeans live in the EU remember. Sometimes i get the feeling the EU is nothing but another german attempt to rule their neighbours, the fourth Reich this time. Other times i think the EU is a good idea though

[Gangerolf]

and the eu flag looks really evil

[Ecthy]

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